The appointment of Ginka Ginting, a 27-year-old electoral campaign volunteer with no professional track record beyond student organizations, to the board of commissioners of PT Pertamina Retail has sparked an understandable public outburst across social media. But what followed was rather predictable: a collective, resigned shrug.

Or, as the cynics say: Isn’t it a time-honored tradition to treat the boardrooms of State-Owned Enterprises (SOEs) and their lucrative subsidiaries as a dumping ground for political IOUs?

In 2021, rock musician Abdee of ‘Slank’ was appointed as an independent commissioner of telecommunications giant PT Telkom Indonesia. Observers have pointed out that his appointment was a ‘payback’ for his support as a campaign volunteer for then-President Jokowi’s presidential runs—both times.

Even more mind-boggling: Dede Budhyarto, another Jokowi loyalist, was unseated from his independent commissioner position in PT Pelni amid allegations of a falsified diploma from Universitas Hasanuddin.

We have also seen it with party loyalists, losing legislative candidates, and influential campaign operators for decades. So, to say that these appointments are shocking is to ignore the historical mechanics of Indonesian political coalitions. It is unfortunately a well-entrenched and thoroughly normalized status quo.

The danger of undermining the roles of commissioners

However, normalcy shouldn’t be conflated with rightfulness. The sheer persistence of political patronage in state firms has bred a dangerous cultural assumption that the role of a corporate commissioner is: (1) a symbolic, part-time honorarium; (2) a comfortable but highly compensated retirement home or a youthful stepping stone; or even worse (3) a state-funded “thank you” note.

By consistently treating commissioner seats as political currency, the state sends a damaging message to both the public and the market that corporate oversight in institutions managing trillions of rupiah of public wealth does not actually matter. It reduces a vital pillar of corporate governance to a secondary reward mechanism, operating on the assumption that a commissioner’s office exists solely to occupy space, sign papers, and collect a paycheck, without exerting any real influence over how a company is run.

This perspective fundamentally misunderstands the constitutional and corporate purpose of a commissioner. In a standard private corporation, a Board of Directors (BOD) runs the daily business, while the Board of Commissioners represents the financial and strategic interests of the shareholders who privately funded the venture.

In the context of an SOE, the ultimate shareholders are not a small group of elite venture capitalists; they are the citizens of Indonesia. Every rupiah an SOE mismanages, wastes, or loses to corruption is money pulled directly from public infrastructure, healthcare, and education.

If the BOD takes reckless strategic risks, misallocates national assets, or engages in creative accounting to hide operational failures, it is the explicit duty of the commissioners to step in, demand an immediate course correction, or exercise their ultimate corporate power: calling a general meeting of shareholders to oust the executives.

Competence is critical for a commissioner role

To execute such a high-stakes mandate, a commissioner must possess a rigorous, non-negotiable level of professional competence. Corporate governance is not an abstract exercise in ethics or a job that can be learned via standard on-the-job training. It requires deep technical expertise in corporate finance, forensic accounting, regulatory compliance, and industrial strategy.

If a commissioner cannot read a complex balance sheet, identify hidden liabilities, or independently evaluate capital expenditure plans, they are effectively a blindfolded watchdog. They cannot audit what they do not comprehend.

When an executive board presents a polished, overly optimistic quarterly review, an unseasoned or politically appointed commissioner lacks the tools to look beneath the surface. They are left entirely vulnerable to being duped, manipulated, or managed by the very executive directors they are legally obligated to oversee. They become compliant rubber stamps, validating corporate disasters long before the public ever catches wind of them.

We do not need to look to theoretical corporate textbooks to understand what happens when an independent professional actually does the job. In fact, we have a striking historical roadmap from our own recent past.

In April 2019, the executive leadership of Garuda Indonesia proudly announced a miraculous financial turnaround, claiming a consolidated net profit of US$ 5 million for the 2018 fiscal year. It was hailed as a massive public relations victory for a deeply troubled national carrier. However, two commissioners representing a minority corporate stake, Chairal Tanjung and Dony Oskaria, flatly refused to sign off on the financial report.

Both seasoned corporate professionals with deep financial acumen, Chairal and Dony immediately spotted an egregious accounting manipulation. The executive board had recognized a 15-year, uncollected future contract with an in-flight Wi-Fi provider as immediate, current revenue.

Their professional defiance and refusal to look the other way triggered an official regulatory intervention by the Financial Services Authority (OJK) and the Finance Ministry. The subsequent forced re-audit stripped away the accounting fiction, forcing Garuda to restate its books and expose a staggering US$ 175 million net loss.

Without independent and highly competent professionals willing to disrupt the boardroom peace, a massive deception would have sailed through unnoticed, hiding systemic operational rot beneath a veneer of fake profitability.

A glaring contradiction

The ultimate structural irony of today’s political appointments sits at the very pinnacle of Indonesia’s current economic architecture.

Dony Oskaria—the very man who blew the whistle at Garuda and saved the public from a massive corporate lie—now serves as the Chief Operating Officer of Danantara and Head of the SOE Regulatory Agency. Danantara has been engineered as a revolutionary sovereign wealth fund and a superholding entity designed to consolidate, restructure, and supercharge Indonesia’s sprawling state assets into a lean, globally competitive economic engine.

The current administration has repeatedly positioned Danantara as a historic step toward world-class corporate governance, efficiency, and credibility in international markets. Dony knows better than anyone in the country that rigorous, independent, and fiercely professional oversight is what prevents state assets from collapsing under the weight of inefficiency and corruption.

Yet, a glaring contradiction is that while the upper echelons of government build Danantara to project global financial sophistication, the ground-level reality of subsidiary appointments remains unchanged. The state cannot credibly claim to be building a world-class asset management system while simultaneously handing out seats on subsidiary boards, such as Pertamina Retail, to amateurs who have never managed a corporate balance sheet.

Are we paying commissioners too much?

This governance failure is made even worse by the extraordinary and often hidden compensation packages attached to the commissioner roles. In Indonesia’s SOE ecosystem, a commissioner’s remuneration is legally pegged to the executive payroll. A President Commissioner receives roughly 45 percent of the CEO’s salary, while an ordinary commissioner is entitled to 90 percent of that amount—effectively taking home around 40.5 percent of the chief executive’s baseline pay.

In mature corporate governance models, non-executive board directors are typically compensated with flat, reasonable annual retainers and modest meeting fees. This structure is intentional; it ensures that their financial well-being is not overly dependent on executive performance metrics, thereby preserving their absolute independence to critique the management.

In Indonesia, we have flipped the script entirely. We have created a system where political appointees are paid a king’s ransom for part-time, non-executive oversight, all while requiring absolutely zero professional skin in the game.

For example, members of the Board of Commissioners at PT Bank Mandiri Tbk were paid a total of Rp5 billion (US$ 270,000). By contrast, an independent board member at ICBC—a Chinese SOE bank generating roughly 13 times more net profit than Mandiri and is the biggest bank in the world—was compensated just RMB 400,000-500,000 (US $70,000) that same year. The year before, when the tantiem had not been scrapped, Kompas reported a single commissioner at PT Bank Mandiri Tbk was paid Rp 38 billion (US$ 2.4 million) in 2024.

Bring back meritocracy to the boardroom

If Danantara and the broader Indonesian state enterprise sector are ever to be taken seriously by international investors, the government must permanently dismantle this political welfare system. SOEs are commercial entities funded by the public sacrifice, not private piggy banks or political rewards. We must establish rigid, transparent, and legally binding meritocratic criteria for all commissioner appointments across every tier of state-owned enterprises and their subsidiaries.

The criteria must demand proven track records in corporate leadership, financial management, or sector-specific technical expertise. A political campaign or a loyal network should never serve as a substitute for a professional resume. Indonesia faces complex global economic headwinds that require our state enterprises to operate at maximum efficiency and peak transparency. To achieve this, we desperately need sharp, uncompromised professionals who know how to guard the national treasury, not a continuous rotation of political loyalists who are just happy to be in the room.

Online frenzy ensued soon after X (formerly Twitter) users discovered Israeli-owned restaurants, businesses, and community groups in Bali. This discovery prompted scrutiny and anger over how Israelis could open up an entire business, or even secure visas to enter the country, when the State of Israel isn’t even diplomatically recognized by Indonesia.

Social media users have also revealed that Israeli visa agency groups have been offering services to enter Indonesia for Israeli passport holders, suggesting a systemic practice.

Without an Indonesian counterpart to approve their documents, this practice would have been dead on arrival, and yet it is not.

Meanwhile, the Corruption Eradication Commission (KPK) made national headlines after it arrested then-Deputy Corrections and Immigration Minister Silmy Karim. The high-profile arrest was unknowingly timely — as if confirming that our immigration sector had been troublesome — since Silmy was arrested on charges of a graft scheme involving the extortion of illicit fees for visas and stay permits for foreign nationals in Indonesia.

Alongside the deputy minister, seven other ministry officials were arrested by the KPK, allegedly racking up Rp 145.6 billion over four years, from 2022 to 2026. In Bali, KPK investigators raided the island’s immigration office in connection with Silmy’s case, suggesting that his practices may have occurred there primarily.

While Silmy’s arrest and the online discourse are two separate instances, they are connected through the web of the problematic Indonesian immigration sector. The former is a formal authority whom the KPK claimed had misused its power for personal gain, while the latter is the presumed effect of the former’s corrupt practices.

But Indonesia’s immigration problem is far more complex than bribery and loopholes at the arrival gates. In this edition of The Reformist, we will uncover the patterns of graft in Indonesia’s immigration sector, its effects on foreign nationals entering the country, and question why this seemingly textbook public service has become a magnet for systemic corruption where the law becomes negotiable through layers of discretionary policies, payments for access, and a business model that rests on weak enforcement.

A playground for corruption

Despite Silmy’s high-profile arrest, his case is only the tip of Indonesia’s immigration corruption iceberg.

In the course of investigating Silmy’s syndicate, KPK cross-referenced the case with a financial intelligence report from the Financial Transaction Reports and Analysis Center (PPATK) that had been quietly accumulating evidence.

It found that 35 Immigration and Corrections Ministry employees had, between 2019 and 2025, controlled 96 bank accounts with a combined balance of Rp 366.7 billion. Only 3 percent of that sum came from their official salaries. The other 97 percent had to come from somewhere — and investigators believe it came from the same extortion scheme applied across years of permit applications.

KPK chair Setyo Budiyanto was explicit at Silmy’s press conference: the scheme operated with a clear division of labor, with some commanding, executing, collecting, and distributing. Commands flowed top-down. Money flowed bottom-up. Every Friday, Rp 100 million went to line Silmy’s pockets, routed through his subordinates, under the code name “malaikat” (angel).

Silmy’s case, however, is not a story of bad apples. Two months before Silmy’s arrest, Suhartono, the Manpower Ministry’s former director general for foreign workers’ placement, was convicted and sentenced to four years in prison.

Suhartono’s crime was structurally identical. He extorted illicit fees from agencies processing the mandatory work plan document that a foreign national must submit before a stay permit application can even begin. His syndicate ran from 2017 to 2025, accumulated Rp 135 billion across eight officials, and at its most brazen, also accepted a Toyota Innova Reborn and a Vespa Primavera as tribute.

Last year, the graft commission uncovered another expatriate extortion scheme within the Manpower Ministry, in which eight ministry officials were arrested for collecting bribes totaling up to Rp 53.7 billion between 2019 and 2024. This particular case unveiled the rotten core of the whole organizational chart behind this graft, as the collected fees were found to have been “redistributed” progressively, with lower-ranking officials and office boys taking a cut of the stolen money.

The ironic gray area between legality and graft

Despite systemic corruption at every layer of the permit process, the number of foreign nationals in Indonesia has conversely grown year on year. An estimate of 184,000 foreign workers was on the Manpower Ministry’s books in 2024, up from 168,000 the previous year. Numbers not only increased but skyrocketed, since pre-pandemic levels had fewer than 100,000 foreign workers residing in the country.

This highlights that foreign nationals and the companies employing them have largely absorbed the unofficial surcharges as a cost of doing business. As one Jakarta Post editorial article noted last year, many hiring companies and foreign workers “probably never knew they were paying bribes, or if they did, just dismissed it as a normal part of doing business in Indonesia.”

Regardless of how foreigners absorb these costs, the structural damage accrues to Indonesia. According to the 2020 World Bank’s Ease of Doing Business (EODB) index, Indonesia ranked 73rd globally, below countries such as Malaysia, Vietnam, and Thailand. Investors see this friction and inefficiency as a signal of where to allocate their capital. The more foreign investors see the rentier economy of immigration, the less likely they are to continue investing in Indonesia.

And while we acknowledge that the EODB is no longer considered the gold standard for measuring the investment climate today, it’s still a useful reference for showcasing how corruption in the immigration sector creates an unpredictable business environment. To support this claim, the chart above highlights how far Indonesia’s foreign direct investment (FDI) has lagged over the past 20 years, despite a strong recovery after the 1998 economic crisis.

From 2019 to 2024, Indonesia consistently hovered below 2 percent, while Thailand sharply bolstered its FDI after the 2020 pandemic, implementing sweeping reforms to boost FDI that were acclaimed by the Organization for Economic Co-operation and Development (OECD).

At the same time, Indonesia drew more criticism than praise from the international body. It highlighted how Indonesian “policymakers have yet to demonstrate their intention to establish a clear role for FDI in Indonesia’s development ambitions,” as well as “failing to live up to its potential as a host to FDI, despite its numerous attributes.”

When rules are applied arbitrarily and legal thresholds fluctuate depending on how much money changes hands, we’re basically telling foreigners who genuinely want to invest in Indonesia not to come here.

The workaround tourist economy

Going to Bali these days will have you marvel at the number of tourists enjoying the Island of the Gods. In 2025, close to 7 million tourists visited Bali, an increase of 9,7 percent from the previous year, with close to a quarter of them being Australian tourists.

But what about foreign businesses that have set up shop all over Bali without any explanation of their legal status?

Bali’s tourism agency estimates that over 4,000 accommodation units are listed illegally, out of the official total of 16,000. Last year, Bali Governor I Wayan Koster claimed that around 400 travel and vehicle rental agencies were illegally run by foreigners. “Many don’t even have offices, don’t reside in Bali, yet are still able to operate. This is clearly outrageous,” said Koster.

The formal foreign workforce may not care about Indonesia’s corrupt immigration process. But foreigners running informal businesses don’t just ignore it; they actively benefit from it.

Officially, foreigners are not allowed to own small-scale businesses. While this definition is loose, the threshold is clarified through Presidential Regulation No. 10/2021. In it, foreign nationals are only allowed to open businesses with a minimum capital contribution of Rp 10 billion or US$ 558 thousand at current exchange rates.

The Indonesian government has since updated this classification through Investment Coordinating Board Regulation (BKPM) No.5/2025, which reduces the required paid-up capital to Rp 2.5 billion or US$ 140 thousand, with the caveat that the minimum investment plan stays at Rp 10 billion.

It is unlikely that these foreigners, be they Israeli, Russian, or Australian, are spending over 140 thousand dollars, with a promise to increase it to 558 thousand dollars, to open a small restaurant in Bali.

To get around the formal requirements, foreign nationals have settled on two well-worn alternatives: marry an Indonesian (plus a few extra steps), or find one to front the business (a ‘nominee’).

The former is straightforward enough; a legal marriage to an Indonesian citizen secures a pathway to residency under immigration law.

But the latter has become a defining feature of Bali’s shadow economy, operating through what is commonly called a nominee structure, in which a foreign national partners with an Indonesian citizen who poses as the formal owner of the business or property while the foreigner retains beneficial ownership and economic benefit.

This grey area has not gone unnoticed. The current Balinese administration has publicly vowed to crack down on such practices. Last year, Bali Governor I Wayan Koster created a task force comprising the National Police, the Military, and local tourism associations to “discipline” the practice. The governor’s concern centers on the rentier dynamic these businesses create. Foreign operators, insulated from the full cost of doing business legally, drive up land prices and living costs for ordinary Balinese while contributing little to the formal tax base.

While Koster has been vocal, there has been little follow-up on how effective the task force has been in cracking down on this issue.

More recently, Koster pushed the national legislature to promulgate the Bill on International Private Law (HPI). The bill, if passed, would consolidate Indonesia’s currently fragmented legal framework on cross-border disputes, covering nominee property arrangements, mixed marriages, and inheritance conflicts, into a single statute, giving local authorities and law enforcement clearer ground to act on cases that today fall under legal uncertainty.

This one example alone tells us enough that corruption in the immigration sector is not a ‘bug’ in the system. Corrupt officials and their brokers design bottlenecks in immigration permit processing, which they then monetize. They did not just ‘stumble’ upon the opportunity by chance.

Multifaceted problems require multi-layered solutions

As is the case with many of Indonesia’s governance problems, the immigration issue won’t be solved simply by clean housing for the Immigration and Corrections Ministry or the Directorate General of Immigration at the Manpower Ministry alone. Solutions will only come when stakeholders from all levels of government take up responsibility and are convened to tackle the issue together.

Last year’s Manpower Ministry bribe case makes the point sharply. When graft commission purged the agency, they found that the illicit practice had been running since 2012, spanning three ministerial regimes. It’s hard to imagine how a scheme this structured, extracting bribes from foreign work-permit applicants for over a decade, could survive three changes in leadership without ever triggering an internal red flag.

What Silmy’s arrest, Suhartono’s conviction, and last year’s Manpower Ministry bribe scandal have in common cannot be simplified to routine graft. It is the entire architecture behind the country’s immigration governance that needs reform.

For illegal businesses, the remedy for all of this already exists in law, making the scale of the problem harder to excuse as an accident. Under Article 33 of the 2007 Investment Law, any agreement that puts share ownership in one person’s name for the actual benefit of another is void from the outset, making it legally nonexistent.

Article 146 of the Limited Liability Company Law lets a district court dissolve a company outright on a prosecutor’s or interested party’s petition if the company violates prevailing regulation or its founding deed is legally defective — which a nominee arrangement built to dodge foreign-ownership limits plainly is.

The tools to dismantle a nominee-run business exist from the district court up to BKPM in the capital. That thousands of these arrangements have been allowed to operate openly for years is a story about enforcement nobody chose to use, be it in Bali with their task force or higher up in the country’s law enforcement and executive branch.

An honest look into a dishonest sector

To provide an answer to Indonesia’s immigration problems is not what this article seeks to do. But what is clear from this discussion is that the issue is two-pronged: (1) formal authorities have misused their powers; (2) opportunity-seeking foreigners take advantage of the system’s lack of enforcement.

At the macro level, if immigration graft scandals continue to make national headlines, foreign investors may soon take their capital elsewhere as perceptions of Indonesia’s rule of law deteriorate.

At the micro level, tourists who have set up shop in the country’s tourist hotspot will continue to manipulate the country’s legal system so long as the system allows high-level public officials to abuse their discretionary powers.

Until these problems are confronted honestly, it shouldn’t come as a shock that Israelis have found a way to “infiltrate” Indonesian borders. Keep this up, and the system will keep producing exactly what it was designed to produce: a playground, as it has always been, for those who know how to play it.

What are your thoughts on this issue? Do you see these criminal syndicates and illegal businesses as a systemic problem or a simple case in need of a band-aid? Let us know in the comments what reforms should be made to Indonesia’s immigration sector!

Writer/Researcher:

Editors: , ,

Visual designer:

Two days ago, 30 June, the court sentenced former Education Minister Nadiem Makarim to ten years in prison. He also has to pay Rp 809 billion in restitution, or else serve another five years.

Nadiem has been on trial since last year for allegedly causing state losses in the procurement of Chromebooks during his term in office.

But he is not the first public official or government consultant to be named a graft suspect without ever taking a dime of public money. Apparently, under Indonesia’s corruption law, any act that can be regarded as an abuse of power resulting in state or economic losses can be charged as corruption. We’ve written about it here.

Criminalization of the Chromebook policy

The case stems from a massive Education Ministry initiative to procure hundreds of thousands of laptops for public schools across Indonesia. To ensure these devices could be managed remotely, monitored for appropriate student use, and updated securely at scale, the ministry required the laptops to include a centralized Device Management system. As Windows-based alternatives with equivalent management software were significantly more expensive, the technical requirement effectively made Google’s Chromebook the only financially viable option for the mass rollout.

State prosecutors and the court interpreted this specific technical requirement not as a cost-effective choice for cloud-based education, but as a deliberate attempt to lock the project specifications to benefit a single proprietary ecosystem, Google, forming the core of the corruption charges against Nadiem.

The alleged conflict of interest rests on the fact that Google had invested in Gojek years earlier, the company Nadiem co-founded, which he left before joining the cabinet.

The problem with treating that as proof of a quid pro quo is timing: The bulk of Google’s investment in Gojek-linked entities happened before Nadiem became minister, not after, which cuts against the idea that the Chromebook decision was payback for money he’d already received years earlier.

A prior investor relationship that predates the office in question is a weaker basis for a conflict-of-interest finding than one that develops during it. Of course, that doesn’t make the specification choice above scrutiny. Still, it’s a meaningfully different claim than “he steered a contract to a company that was paying him” – and the verdict doesn’t appear to draw that distinction.

The court also determined that the Development Finance Comptroller (BPKP)’s finding of Rp1.56 trillion in state losses was valid, even though, constitutionally, only the Supreme Audit Board (BPK) has the authority to audit government programs and determine state losses. A former BPK head testified in court that the methods used by the BPKP were dubious at best, often relying solely on sampling data. That distinction is not procedural nitpicking: an audit institution without constitutional authority to declare a state loss produced the single number the entire prosecution hangs on.

Moreover, the old audit logic was built for static assets. If a government construction project procures more cement than it needs and it hardens unused in a yard, that is an obvious, quantifiable loss.

But technology does not behave like cement. Tech procurement is inherently a bet on an ecosystem and a mass adoption curve. Today, the overwhelming majority of those Chromebooks remain operational in classrooms. Can the small fraction that is not fairly labeled a criminal state loss? If 100 percent efficiency is the benchmark for legality, then countless other flagship government initiatives are structurally criminal.

The phantom enrichment

Here is a part of the verdict that should unsettle anyone who thinks the ruling was a clean finding of guilt: the panel of judges explicitly ruled that it was not proven that Nadiem had unlawfully enriched himself. He was convicted of abuse of authority causing state losses — a separate charge — and one judge on the five-member panel dissented outright, saying he saw no convincing evidence of malicious intent.

And yet, the restitution order treats the Rp 809.59 billion as a personal financial benefit requiring repayment. That sum was never a liquid payout, a bribe, or a slush fund extracted from the state budget. It was a standard, closed-loop corporate balancing act between a parent company, PT Aplikasi Karya Anak Bangsa (AKAB), which Nadiem founded, and its subsidiary, PT Gojek Indonesia.

Ahead of the Gojek-Tokopedia (GoTo) merger and IPO, Gojek needed to clear a pre-existing debt owed to AKAB, most of which traced back to a roughly US$ 787 million investment Google had made in AKAB years earlier. Gojek issued new shares to AKAB, AKAB paid for them, and on the same day, Gojek transferred the exact same amount back to extinguish the debt. No cash left the corporate group. Not a single rupiah ever entered Nadiem’s personal pocket, and he has said he never had access to the funds.

Restitution in Indonesian corruption law is meant to claw back what a defendant unlawfully gained. Here, the court seems to have imposed a giant number because it was the most legible figure in the case file, not because it traced to anything Nadiem actually received. That is a more serious problem than misread accounting. It’s simply that the personal liability and the enrichment finding don’t align.

How can we expect public officials to do reforms when a jail sentence is lurking?

The immediate consequence of this legal overreach is complete bureaucratic paralysis. When any innovative policy decision can be retroactively branded an abuse of power, the incentive to reform vanishes entirely. Public officials would quickly realize that the only way to protect their freedom is to strictly maintain business as usual. The system effectively mandates safety through mediocrity, actively punishing anyone attempting to modernize state functions.

Worse, this creates a chilling effect that will permanently repel external talent from entering government service. The court’s logic in this verdict implies that simply having once held equity in a company that later interacts with state policy can be twisted into a criminal conflict of interest, years and job changes later. The state will be run exclusively by career bureaucrats who know how to navigate checklists, shutting out the expertise Indonesia needs to compete globally.

We have to talk about state losses

If “state losses” is to remain the primary weapon used to lock a professional away for a decade, the financial calculation behind it must be flawless, robust, and beyond institutional dispute. In this case, it was neither: the number came from an agency the Constitution doesn’t authorize to make that finding, using a methodology its own former leadership called unreliable.

The double standard this exposes isn’t hypothetical. While a former minister is being personally bankrupted over a disputed audit of a program that mostly worked, the current administration has been writing the opposite protection into law for its own flagship program. A financial-sector law passed this week shields purchases of bonds issued by Danantara, the sovereign wealth fund chaired by senior cabinet figures, from criminal, civil, and tax investigation. The bond records can’t even be used as evidence in court.

One government program gets audited by an agency with no constitutional standing to do so, and the finding becomes a decade in prison. Another gets statutory immunity from scrutiny by design. If the legal system can carve out investigation-proof status for the state’s biggest current bet, it is hard to argue in good faith that a defensible laptop specification from 2020 deserved the opposite treatment.

What’s next

If there is a fix, it starts with restoring BPK’s constitutional exclusivity in practice, not just on paper. No state-loss finding should support a criminal conviction unless BPK, not BPKP, produced it.

Alongside that, Indonesia needs something closer to a business-judgment standard for technical and procurement decisions made in good faith with documented rationale: the question in a courtroom should be whether an official enriched themselves or acted with corrupt intent, not whether their engineering choice turned out to be litigable in hindsight. Without that distinction, the same instrument now being used against Nadiem is available, at will, against the next official who tries to build something.

None of this is an argument for easing up on corruption enforcement. It’s the opposite. Indonesia has no shortage of cases with an actual bribe, an actual bank transfer, an actual official who got personally richer while a program collapsed. The Chromebooks still running in classrooms today are simply not that.

When prosecutors and courts spend their credibility and the public’s attention manufacturing a state loss out of a defensible technical spec, that is institutional capacity not spent on the cases where the money really did disappear, and someone really did pocket it.

Treating every costly policy bet as a potential decade in prison doesn’t make the anti-corruption regime look tougher. It makes it look undiscriminating, and it lets the real cases blend into the noise of all else being prosecuted with equal ferocity. If the goal is actually deterring theft of public money, the system needs to be able to distinguish that from a minister who made a call that didn’t pan out perfectly.

This article responds to The Reformist vol. 29 on BPJS Ketenagakerjaan, which discusses the shortfalls of the program and how relevant ministries responsible for social security have fumbled protection amid a flailing economy. Read here.

The Reformist recently asked in a volume whether BPJS Ketenagakerjaan can “save” Indonesia’s vulnerable workforce. It is a sharp, well-sourced piece, and it is right about the danger: seven out of ten workers stand outside the employment social security system.

As the article pointed out, the clock is ticking toward financial deficits by 2038. Without genuine reforms, BPJS Ketenagakerjaan, as a social protection program, faces the risk of collapse.

But the article seems to put BPJS Ketenagakerjaan, an implementing agency, on trial for “crimes” committed by the legislature, the Finance Ministry, and the Manpower Ministry. This misdirection risks letting the actors who actually hold the levers walk away free from the consequences of their misdeeds.

An operator on trial for laws it never wrote

Let’s begin with what BPJS Ketenagakerjaan legally is. Under Law No. 24/2011, it is a public legal entity, or, in plain words, an operator. It can collect contributions, manage Social Security funds, and pay out claims across five programs.

It cannot, however, decide the rules of the game it plays. Contribution rates, benefit formulas, eligibility criteria, investment mandates, and enforcement powers are all set upstream. They are stipulated in Government Regulations (PP) and in Ministerial Regulations issued by the Manpower Ministry, the Finance Ministry, the National Social Security Council (DJSN), and ultimately the House of Representatives (DPR).

BPJS Ketenagakerjaan can’t legislate its own coverage, just as a cashier can’t rewrite the menu.

Therefore, please allow me to “defend” BPJS Ketenagakerjaan by redirecting the problems listed in the Reformist’s article to those who are actually responsible:

I. The JHT withdrawal scandal was a policy reversal, not an operator’s blunder

The article treats the hemorrhage of Jaminan Hari Tua (JHT) funds, with more than a million workers cashing out in a single year, as evidence that the program is misdesigned.

It is misdesigned. But BPJS Ketenagakerjaan did not design it.

The lump-sum withdrawal upon resignation or layoff was stipulated in PP No. 60/2015, when the government reversed its own retirement-preservation principle under pressure from organized labor.

The agency administering that rule, BPJS Ketenagakerjaan, had no vote in the matter. To blame the operator for honoring a regulation it is legally bound to honor is to mistake obedience for authorship.

II. Weak enforcement is due to a lack of sufficient manpower (in the ministry inspectorate)

The article correctly references the Ombudsman’s 2021 finding on weak enforcement, especially towards non-compliant employers. Yet it then splits the blame between BPJS Ketenagakerjaan and the Ministry of Manpower, as though the two share the mandate.

They do not.

Labor inspection is the exclusive authority of the Directorate General of Labor Inspection. BPJS Ketenagakerjaan cannot impose sanctions on a non-compliant employer. It can only refer to one.

With roughly 2,400 inspectors stretched across a workforce of more than 150 million, the 523,000 unregistered employers are not a symptom of operator negligence. They are a symptom of a state that funded an obligation without funding the means to enforce it.

III. The missing subsidy is a budget decision

The article accurately notes that BPJS Kesehatan, the country’s national health insurance program, has reached near-universal coverage, while BPJS Ketenagakerjaan languishes. This is true, but it’s not the operator’s fault that it doesn’t have the budget to provide universal coverage.

BPJS Kesehatan thrives in this area largely because the country introduced a scheme called Penerima Bantuan Iuran (PBI), a state-funded program that pays premiums for the poor. But there is currently no equivalent for employment social security.

That absence is not an institutional limitation of BPJS Ketenagakerjaan. It is a deliberate fiscal choice by the Finance Ministry and ratified by the House. Article 14 of Law No. 40/2004 actually mandates PBI for both BPJS, but this is not the case in practice today. In other words, the comparison The Reformist’s article uses to indict the operator is thus, in fact, an indictment of the government’s budgeting decisions.

What the operator can do once the architecture lets it

While it would be wrong to direct responsibility for solving the above-mentioned problems to BPJS Ketenagakerjaan, that doesn’t mean the agency is entirely absolved of blame.

It should also communicate more openly with the public about these constraints, especially the workers it serves, so that it does not bear the brunt of public frustration alone.

But these are second-order problems. The binding constraint is upstream, and that is precisely why the agency’s potential is being underestimated.

Consider what the operator already has: a national collection and investment machine, a grassroots agent network (Perisai), digital enrolment channels, and a growing web of cooperation agreements with sub-national governments. The premium cut of Rp 8,400 for informal workers, stipulated in PP No. 50/2025, shows the instinct is there.

What this machinery lacks is not competence. It lacks a mandate with teeth, a fiscal instrument to subsidize those who cannot pay, and an enforcement partner that is actually resourced.

If we give BPJS Ketenagakerjaan a statutory coverage mandate backed by a functioning inspectorate, a PBI-equivalent subsidy carved out of the APBN, and the DJSN’s willingness to coordinate rather than spectate, the coverage curve that has crawled fourteen points in twenty-eight years will bend. The limiting “ceiling” is not the operator but the policy architecture. In fact, the operator has been trying to break it with one hand tied behind their back.

What genuine cooperation would actually look like

If the constraint is the architecture, the remedy must be architectural, and it requires that every party move at once. The point is not that BPJS Ketenagakerjaan is blameless. It is that no single actor can close a thirty-point coverage gap alone. Here is what the actors’ orchestration could look like:

The government holds the heaviest instruments. The Finance Ministry should carve a contribution subsidy for the poorest informal workers out of the State Budget, a PBI for employment modeled after the health version, beginning with the cheapest and highest-impact floor (work accident and death coverage, JKK and JKM, at roughly Rp 16,800 a month) before layering pensions on top.

Enrolment should become automatic immediately after a regulation is formalized, bolted onto the OSS business-licensing system, the issuance of a business identification number (NIB), tax registration, and the Regsosek social registry. This will ensure that protection follows the worker instead of waiting for the worker to discover it.

The Manpower Ministry must properly resource its Directorate General for Supervision and Occupational Safety and Health, with more inspectors reaching the district level and a live data bridge to BPJS so that non-compliance becomes visible and actionable. And the DJSN must finally start coordinating rather than merely spectating, gradually restoring JHT’s retirement-preservation purpose.

Employers will comply when evasion costs more than compliance. Registration should be tied to procurement eligibility, license renewal, and tax and export clearances, so that the billion-rupiah fine written into the 2011 law stops being a useless deterrent it is today. Firms that comply should be rewarded with recognition and lighter reporting, not merely spared punishment.

Workers, especially in the informal and online gig economy, will not enroll on their own through a counter they do not know exists. Gig workers should be automatically enrolled, with the right to opt out, as a condition for platforms (e.g., Gojek, Grab, Maxim) to operate at all.

Everyone else is best reached through the associations they already trust, the ojol communities, the market-trader cooperatives, the fishing and farming groups, rather than through atomized individual sign-ups. And, importantly, JHT must stop being treated as a severance ATM, which requires both financial literacy and a redesign that makes the long-term products genuinely worth holding.

Trade unions, including this author’s own, must own their share of the problem too. The 2022 campaign that forced the reversal of JHT preservation protected short-term liquidity at the direct expense of long-term retirement adequacy.

The labor movement should now spend its considerable mobilizing power on the opposite goal: an adequate retirement pension (Jaminan Pensiun) and stronger job-loss insurance (Jaminan Kehilangan Pekerjaan), so that defending workers no longer means defending their own poverty in old age.

Unions should also drag the tripartite forums from grievance toward genuine co-design, and extend their organizing to the informal and platform workers that the whole system currently forgets.

This is what cooperation between the State and individuals, in Beveridge’s phrase, would actually require. Not just a slogan, but a synchronized set of decisions by the very actors the original article left out of frame.

Let’s stop asking the wrong question

So the question is not whether BPJS Ketenagakerjaan can save Indonesia’s vulnerable workforce. The honest question is whether the other actors will finally do their part by writing the laws, funding the subsidy, and staffing the enforcement that an operator cannot conjure on its own. The agency can carry the load. But it cannot be asked to build the road, pass the budget, and hire the inspectors while doing so.

The time bomb is real. But it was assembled in the ministries’ and the parliament’s meeting rooms, not in the operator’s offices. Pointing the spotlight at BPJS Ketenagakerjaan makes for a tidy villain. But it also lets the people holding the detonator stay comfortably out in the shadows.

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We’ve written previously that a controversial provision in the now-passed Law on Financial Sector and Strengthening (UU P2SK), which adds a growth mandate to Bank Indonesia (BI), could erode investors’ trust in the central bank’s independence. But turns out there’s a provision more egregious in the newly minted law.

Meet Article 50A of UU P2SK. A provision that allows Indonesia’s sovereign wealth fund Danantara to issue specific loan instruments, dubbed “Patriot Bonds” and “Merah Putih Bonds,” carrying a startling perk: an absolute immunity from criminal, civil, and tax investigations.

The article explicitly states that transaction data on the purchase of these bonds cannot be used as a basis for tax assessments or as legal evidence in court.

For all practical purposes, Indonesia has just institutionalized a recurring, permanent tax amnesty program, hidden inside the fine print of a financial sector law.

Let’s run the scenario. You have a stash of questionably acquired funds that you cannot spend without raising suspicions. If you purchase the Patriot Bonds, authorities can never come after you to ask how you acquired those funds. Now, doesn’t it closely resemble the tax amnesty program?

But a tax amnesty is supposed to be a historic, one-time compromise.

The logic is simple: the state offers a temporary clean slate to bring hidden wealth into the formal economy, widening the tax base for the future. Yes, it is problematic for the country’s economic justice, fiscal credibility, and institutional transparency — not to mention that it is fundamentally unfair to the millions of honest, taxpaying citizens — but it is somewhat tolerable as a pragmatic tool to reset the system if it happens once.

But when amnesties become a recurring fixture, disguised as “patriotic” investment bonds no less, the logic just collapses. Why would anyone comply with standard tax rates if they can simply wait for the next state-sanctioned amnesty? Instead of broadening the tax base, this “no-questions-asked” mechanism rewards tax evasion and shrinks tax receivables, creating a moral hazard that hollows out compliance.

Finance Minister Purbaya Yudhi Sadewa has denied allegations that Patriot Bonds amount to a form of tax amnesty, arguing that investors who purchase the bonds won’t automatically become immune from all legal ramifications.

“It’s just the money [used to purchase the bonds] that is immune, not the company. Unlike tax amnesty, which grants immunity [to the company too],” he said.

But that isn’t reassuring enough. If the funds used to purchase the bonds are protected from scrutiny, then purchasing the bonds effectively becomes a legal loophole for those seeking to launder illicit funds, just like the tax amnesty program. Even worse, whereas one would have to pay a penalty on declared assets under the tax amnesty program, the Patriot and Merah Putih bonds would instead generate some interest.

What’s more alarming, however, is how this policy came to light. Over two weeks after the law was reportedly passed, the official text of UU P2SK still cannot be found on any public government portal. One couldn’t simply find it on the House of Representatives’ (DPR) site or any official legal documentation and information network (JDIH) sites. To actually get our hands on the text of the P2SK Law, we were forced to find leaked drafts and press reports.

This case is just an instance of a worrying legislative trend in Indonesia, in which crucial bills are drafted behind closed doors, rushed through approval, and shielded from public scrutiny until it is too late. But this case is especially bad because a policy that could potentially grant alleged tax evaders immunity from criminal prosecution should be fiercely debated in the public square, not snuck into a final draft that the public couldn’t even find to read.

The government may argue that the Patriot and Merah Putih bonds are necessary to fund national development. But financing the future by dismantling the rule of law and undermining the fiscal contract is a losing strategy. Capital might flow in today, but institutional credibility—once burned—takes decades to rebuild.

The latest K-Drama craze, “Teach You A Lesson,” has sparked heated discussion about the roles of schools, teachers, and the government in teaching kids to be good people. Watching it made me think about our own education system: Do we have anything in our curriculum that ensures our kids know how to be good people and, by extension, good citizens?

In the upcoming 2029 elections, Gen Z (born 1997-2012) is predicted to dominate the voting demographic. Meaning, the next election year will be a big day for the digital natives and, for some, first-time voters.

Voting is a pivotal decision-making process for a good citizen. The question is: are they prepared? One is choosing their leaders and regulators, so two minutes in a voting booth could affect a voter’s life for years to come (it is, quite literally, life-changing). So, shouldn’t voting be something that one is well-prepared for? And even more importantly, shouldn’t students be aware of their duties after casting their ballots?

If a student could spend days and nights preparing for university entrance exams, shouldn’t an important civic duty get a somewhat similar preparation?

Gen Z has proven to be more politically aware. Thanks to the internet, they grew up with endless information at their fingertips, which has affected their media consumption and literacy, as well as their exposure to global socio-political and economic issues. A UK study in 2024 even showed that Gen Z are more willing to express their moral convictions, including through civil disobedience. In a nutshell, younger generations are more digitally literate and unafraid to express themselves.

But one question remains: Where is the best place for young adults (17- to 19-year-olds) to learn about this, if not school, where they already spend a great chunk of their time?

We already have the answer to that: Civic Education, or, as you might be more familiar with it, ‘PPKn’. The tool for teaching kids about civic duties has been part of our curriculum for decades. Though whether or not it has been effective–or even enough–remains to be seen.

It’s time we take PPKn at school seriously

Let’s first walk down memory lane. What do you remember from your PPKn class at school? We had it in elementary school, junior high, high school, and even at universities. But if you’re like me (the old me, at least), you might only remember being taught that civic duties are helping the elderly to cross the street, never skipping classes, or joining the neighborhood rotating night watch (siskamling).

That was how a “good citizen” was portrayed for years, and unfortunately, it is still the case today. Grab a 12th-grade PPKn book now, and this is what you will find.

Civic education is one of the most strategic platforms through which a state can deliberately reproduce its ideological values across generations. In Indonesia, PPKn clearly reflects this pattern. It has undergone multiple name changes and curricular overhauls, but its core logic has remained consistent; it adapts to serve the political needs of the era in which it operates.

The pattern is visible across our history. After independence, our civic education focused on instilling the value of patriotism and guiding the newborn country as it began its journey. Over time, its scope expanded to discuss the role of government, civil rights, and civic duties. During the New Order, PPKn taught the country’s history, our geographical presence, our constitutions, and the manifestation of Pancasila as our core value.

So, is PPKn, our civic education, good enough? Before we answer that question, let’s take a quick world tour.

PPKn around the world

In democratic countries, civic education is a platform for nation-building. Most civic education subjects worldwide cover topics such as history, core values and principles, culture and norms, and political awareness. Some Scandinavian countries (e.g., Denmark, Finland, and Sweden) even incorporate intergenerational topics such as climate change and justice, digital citizenship, and economic inequality.

Some newly democratic countries, on the other hand, shared a common tendency to teach their “dark” history by building the discourse around “unity”.

South Africa, for example, has reformed its high school history curriculum to “heal the divisions of the past” — taking lessons from its painful apartheid history to build a united and democratic country. Another example is Rwanda, which in 2007 launched its civic education program, called “Itorero,” aimed at enabling Rwandans to reacquaint themselves with the values and taboos of their culture under a post-genocide government.

What about Indonesia?

Well, if it’s up to me, I say that our civic education has long been stuck in a superficial portrayal of a utopian society, in which no conflict is ever clearly and rightfully explained (why did conflicts happen, and how?), and reality is too distant (or perhaps too scary) to be put in the book.

Bad things that have happened in our past, particularly those we can clearly draw lessons from, are just swept under a metaphorical rug. Take the New Order-era mass murders. In PPKn books, we are taught that murder is wrong and violates basic human rights. Yet, the books never fairly mention why and how the mass murders that happened during 1965-1966 happened, who ordered them, and why communism was to blame. Students at school are expected (or rather, forced) to go on with their lives without learning about the dark sides of our history, pretending all is well.

It is as if, no matter our past, as long as we help the elderly cross the street, never skip classes, and join siskamling, our democratic society would be fine.

But this kind of civic education ultimately risks offering our younger generations smoke and mirrors about democracy, civic duties, and being a good citizen.

If we want the younger generation to actually be better citizens who exercise their duties and know how to demand their rights from the state, so that they can live better lives in a well-maintained democratic society, we need to start taking PPKn seriously.

Reforming the education space, even just one subject, is a complicated task that would require years to complete and involve multiple actors. But what can we start doing now?

Reimagining the PPKn that we deserve

First, we have to rebrand the idea of what a “good citizen” is.

Being a good citizen can actually take many forms: paying our taxes, keeping public areas clean, respecting different opinions, and following the law. But in a growing democracy, good citizens are also responsible for keeping the government in check.

This is what is currently missing from our PPKn curriculum. Yes, it already taught about voting as our constitutional right. It also taught about voter abstention (golput) and its implications for democracy. But it stops there. It doesn’t teach students what happens after we elect a leader.

A good PPKn should teach that a citizen’s duty does not stop at the voting ballot. Monitoring, offering opinions and feedback, and criticizing policies that seem not to be working are also duties a good citizen must perform.

Civic education should inform students that criticizing the shortcomings of the government, state administrators, policymakers, and their policies or programs is a civic duty. This would prevent the false belief that many, unfortunately, subscribe to today: that criticism of the government is an attack on democracy.

Here is an analogy. If we love someone, don’t we want our partner to be the best version of themselves—to fulfill their potential? Wouldn’t we want to stop them from making the same mistakes over and over again? Apply that to our relationship with our country, and it would be the same.

Second, talk about real problems in class.

PPKn teachers can start by encouraging students to talk about the past or any ongoing issues in their own city. Let them realize that they do not live in a vacuum.

For example, students in Bekasi and Tangerang can talk about the waste management problem in their city; students in Gresik can talk about the correlation of growing industries in their city to people’s quality of life (or the lack thereof); students in Jakarta can talk about how integrated public transportation can change people behavior and relationships to green public spaces; or students in Maluku can talk about why renewable energy options like solar panels are more reliable than state-provided electricity.

My point is that schools should broaden their students’ horizons. Then, only after the class has become a safe place for students to breakdown real problems in their surroundings, teachers then can tune up the conversation level to more complex issues, such as Indonesia’s dark history of mass murders and activists kidnapping in President Suharto’s New Order dictatorship, or signs of state’s oppressions to our rights and freedom of expression, or the juxtaposition between the Nutritious Free Meal (MBG) program’s well intent and its problematic implementation on the ground.

Third, “overlay” the online world into the classroom.

The internet is a whole different world, and Gen Z and their younger counterparts, Gen Alpha, spend half their time there. They not only learn and get information online, but also participate in political discourse, build community, and shape new culture.

Civic education should actively respond to this by incorporating a digital literacy curriculum. In class, students (and teachers) can learn together to differentiate real and fake news, critically assess AI content, and detect misinformation, cybercrime, and cyberbullying. Students and teachers can also benefit from understanding algorithmic biases, such as confirmation bias, sampling bias, and representation bias.

This digital fluency has direct implications for civic participation.

With the abundance of information available online, young people theoretically have every opportunity to be well-informed before they cast a vote — candidate track records, professional backgrounds, and business affiliations are all publicly accessible.

Teachers can play a crucial role here: guiding students to verify whether what they read is accurate and not misleading, and facilitating open, critical discussions about power structures in politics.

When students encounter information that a political candidate has ties to or is heavily affiliated with certain business interests, they should be equipped to ask how much that would factor into the candidate’s future decision-making — and whether the candidate’s personal interests might override their mandate to serve the public.

That kind of critical readiness is ultimately what prepares students for election years.

Lastly, the way students learn about citizenship should change.

We can learn from Germany for this one, unironically. Their foundational frameworks for civic and political education, called the Beutelsbach Consensus, adopt three principles:

First, civic education classes should be free from indoctrination. Students should not be overwhelmed, caught off guard, or hindered in forming an independent judgment. Second, controversial issues must be taught as controversial. Teachers should not, by any means, only present their own opinions or favor only one opinion. Different opinions should be discussed and compared. Third, students should be given fair weights to express their personal interests. Teachers must facilitate students’ analysis of real political situations.

While that model is still being tested for its effectiveness to protect democracy, we can learn a thing or two. The banking model of education — where teachers remain the sole authority in the classroom to “deposit” knowledge into students, a practice Paulo Freire criticized — is no longer an appropriate tool for cultivating critical thinkers.

To counter that passive model, Freire proposed “problem-posing education”, where teachers and students co-produce knowledge and co-examine their reality through dialogues, reflections, and mutual engagements.

A bet for cultural change

Look, I’m arguing for a cultural change here. Let us take a minute to imagine.

What would it look like in 2029 if young, first-time voters learned this version of PPKn? Would they critically assess the presidential candidates’ track records in class with their peers and teachers? Would learning about Indonesia’s dark history inform their voting decision to not repeat the cycle? Would openly discussing political dynasties discourage Tangerang high school students from voting for a candidate who will retain power for years?

It is only in my imagination (and now yours) today, but changes like these can, and will, happen if we design our civic education responsibly.

Want to share your views on public policy reforms or other political issues?

Write to us: connect@thinkpolicy.id

As the rupiah plummeted, Indonesians nationwide have organized protests expressing discontent with the government’s handling of the country’s worsening economy. Can Indonesia get out of this rut?

Economists have warned since last year to rectify the disproportionate budget for populist programs like the flagship Free Nutritious Meal (MBG) program. Some argue that the Indonesian central bank, Bank Indonesia (BI), should intervene to stabilize the rupiah. While they are all good recommendations, we thought it would also be a good idea to look back in history to see whether we have been through a similar crisis and how we handled it.

Turns out, once upon a time, we actually did rescue ourselves from an impending economic crisis.

In 2013, Indonesia faced an economic crisis after the United States Federal Reserve (‘The Fed’) signaled it would begin tapering its bond-buying program. This move sent shockwaves through the developing world, triggering capital outflows, currency depreciations, and tumbling financial markets in what became known as the Taper Tantrum.

Indonesia was among the hardest-hit, joining Brazil, India, South Africa, and Turkiye as countries dubbed the “Fragile Five” — a group perceived as most vulnerable to the Fed’s tapering policy. Incredibly, Indonesia made its way out of the “Fragile Five” in just seven months.

How did we do that? In this edition of The Reformist, we uncover how Indonesia lifted itself from the brink and what lessons the Prabowo administration would do well to heed today.

Growth under borrowed time

Much like the United States-Iran war, the Taper Tantrum was a sudden, unexpected phenomenon that caused global panic. After the 2008 global financial crisis, the US entered a Great Recession. The Fed then stepped in to revive the economy through Quantitative Easing (QE).

Given a deflationary US economy, everyone was afraid to spend. So, the Fed purchased assets and bonds from US commercial banks in exchange for dollars, thereby pouring more money into the US financial system. This, in conjunction with lowering the interest rate, led people to spend more, reviving the sluggish economy.

The effects of the US’s domestic policy reached Indonesia precisely because of this influx of new capital. With low interest rates, US dollar-holding investors began to look to emerging countries like Indonesia for higher returns on their investments.

From 2009 to 2014, external financing to Indonesia (bonds, equities, and loans) increased from US$ 24.7 billion to US$ 32.6 billion, peaking in the second quarter of 2013, just before the crisis ensued. Globally, emerging markets received close to half of all capital flows during this period, with roughly 90 percent of that concentrated in just eight countries; Indonesia among them. Critically, much of this inflow exceeded what Indonesia’s economic fundamentals could actually justify.

This led to what former Finance Minister Chatib Basri labeled a “false normal world.” The post-2008 flow came with an incredible wave of new capital. But even he understood that the numbers were unsustainable. During this period, the rupiah appreciated sharply against the dollar.

Additionally, the economist noted a lack of investment in the country’s export-oriented sector, with investment instead directed towards the highly volatile commodities sector. The former would have created industries meant for long-term economic growth (factories, manufacturing, traded goods), whereas the latter is a short-term cash grab that gets transferred out of the country as soon as commodity prices spiral. Indonesia was getting richer during this period, but doing so on a fragile foundation.

Normal, on the other hand, is a world without QE. When the Fed signaled in May 2013 that it was preparing to wind down its QE program, the world snapped back to normal very quickly. Investors who had been chasing returns in emerging markets suddenly had reason to bring their money back to the US.

For Indonesia, the consequences were swift and severe: the rupiah plummeted, the stock market collapsed, and foreign exchange reserves began to drain.

The Taper Tantrum had arrived.

Preventing monetary lift off

Just days before the Fed signaled that it would reverse the QE policy, Chatib Basri was appointed finance minister by then-President Susilo Bambang Yudhoyono (SBY) to oversee the appropriation of the 2014 state budget. But when the Taper Tantrum began, all focus shifted to handling an impending economic crisis.

The most crucial aspect of taming the market during the period was to prevent panic selling of the rupiah. The government did so by applying a variety of monetary policies through central bank intervention. BI pulled three levers in quick succession: hiking the policy rate, tightening liquidity conditions, and, critically, pulling back from excessive foreign exchange market intervention.

On the rate front, BI increased its policy rate by 175 basis points to 7.25 percent and raised the overnight deposit facility rate — the rate at which commercial banks receive for parking their money in BI — to 5.5 percent. Higher interest rates make holding rupiah-denominated assets more attractive to investors, since they now earn better returns, slowing the rush toward the exit.

The intuitive assumption is that a weakening rupiah is driven by businesses and individuals rushing to buy dollars to avoid a crash. This is true if those dollars leave Indonesia. But if the dollar remains within the country’s banking system, the pressure on the exchange rate is cushioned, making it easier for the central bank to manage.

To keep dollars in the system, BI introduced biweekly foreign-exchange swap auctions with commercial banks, giving businesses a way to hedge their dollar exposure without physically taking dollars out of the country. It also gave banks broader maturity options, or the liberty to choose how long they would like to park their US dollars with BI, making it more attractive to keep dollars in the Indonesian financial system.

The most counterintuitive decision, however, was what BI chose not to do. Before the crisis even occurred, BI had been burning through its foreign exchange reserves to artificially prop up the rupiah.

Chatib, along with the then-trade minister, Gita Wirjawan, argued and eventually convinced President SBY that this had to stop. The rupiah needed to be allowed to weaken in line with market fundamentals, rather than be defended at great cost.

Once BI stepped back from excessive intervention, reserves began to stabilize and eventually recover, climbing from a low of US$ 92 billion in August 2013 back to US$ 99 billion by the end of December and US$ 105 billion by April 2014.

But the decision to let the rupiah weaken was not merely about conserving reserves. It was also a deliberate policy tool in its own right. Economists call this expenditure switching, a policy in which the government attempts to shift consumption of foreign goods towards domestic goods. The way it works is that when a currency weakens, Indonesian exports become cheaper for foreign buyers, making them more competitive in world markets. At the same time, imports become more expensive for Indonesians, nudging domestic consumers toward local products.

One prudent lesson from the Taper Tantrum crisis was that BI could wield its monetary policy decisively, even if it meant sacrificing short-term economic growth.

Today, there is a perception that BI is under pressure to support the administration’s political agenda. This is evidenced by the “burden-sharing” arrangement, in which BI revives pandemic-era bond purchases to finance populist programs, effectively amounting to debt monetization and fiscal dominance. Last year, economists warned that this scheme could threaten BI’s independence, currency stability, and investor confidence.

And then there is the recent revision to the Financial Sector Development and Strengthening Law (UU P2SK), which now expands BI’s role to support economic growth. But even before UU P2SK was passed, BI had cut the policy rate three times last year, from 5.75 percent at the start of the year to 4.75 percent by the end of the year. Much like what the Fed did: with a lower interest rate, borrowing becomes cheaper, but saving becomes less attractive.

This is good for a pro-economic growth administration like Prabowo’s, as more capital can be used to support the government’s policy agenda, whether flagship or infrastructure programs. But it can be incredibly detrimental to the rupiah’s strength, as the currency becomes less attractive to hold for investors. What serves the government’s growth agenda, however, does not necessarily serve the rupiah.

Now, everyone has felt the effects of a weakened rupiah, despite President Prabowo’s claim that “villagers do not use the dollar”. Importing foreign goods has become increasingly expensive, raising the prices of everyday staples and — widely covered by the media recently — pharmaceutical products, impacting public health services and people with chronic illnesses.

After the US-Iran war erupted in February, BI still maintained the 4.75 percent policy rate through May. It was only after the rupiah exceeded Rp 18,000 and persistent external pressure that BI decided it was time to intervene in the interest rate. On 20 May, BI raised it to 5.25 percent, and only a week ago to 5.5 percent.

As soon as the hikes were implemented, the rupiah slowly recovered and dropped below Rp 18,000, signaling a return of market confidence and highlighting the need for monetary prudence amid geopolitical uncertainty.

Ripping the necessary fiscal band-aid

Monetary policy alone, however, would not have been enough to close the wound. During the Taper Tantrum, the deeper structural problem was Indonesia’s current account deficit (the difference between what the country earned from exports and what it spent on imports), driven specifically by fuel subsidies.

The government was subsidizing petrol and diesel prices so heavily that it was encouraging overconsumption, inflating demand for oil imports, and blowing out the budget. By 2013, if left unchanged, internal Finance Ministry estimates projected that the budget deficit would balloon to 5 percent of GDP, well above the 3 percent legal ceiling.

In a meeting with President SBY, Chatib lobbied that the current account deficit must be addressed through expenditure reduction, namely by reforming fuel subsidies. This was highly unattractive at the time, especially with the 2014 presidential elections right around the corner. The vast majority of Indonesians use petrol daily for personal and business consumption, so even a slight price hike would trigger a political uproar.

But the SBY administration was brave enough to rip the band-aid. In June 2013, following heated parliamentary debate and nationwide protests, the prices of subsidized petrol and diesel were increased by 44 percent and 22 percent, respectively. To cushion the blow, the government directed Rp 9.3 trillion from the savings toward direct and conditional cash transfers to 15.5 million low-income households, as well as Rp 7.2 trillion towards rural infrastructure spending.

In his testimony, Chatib cited a 2012 World Bank report which estimated that a fuel price increase of roughly Rp 1,500 per liter would push an additional 0.7 percent of Indonesians into poverty. Thus, fuel subsidy reform, in any capacity, has to be backed with progressive shock measures that take lower-income citizens into account.

Fast forward to 2026, and similar policy efforts seem to be underway in a poorly designed manner.

Just a few days ago, state energy company Pertamina hiked the price of non-subsidized petrol from Rp 12,300 to Rp 16,250 overnight. This followed the previous price increase, which occurred a couple of months earlier in March.

For economists, the increase was expected, given that the price of crude oil rose sharply from around US$ 57 per barrel at the start of the year to over US$ 120 per barrel at the peak of the US-Iran War in April. This is reflected in the state budget, which projected only that crude oil prices would hover between US$ 70 and US$ 95.

Yet, even if it was to be expected, public communication for this policy has been lackluster. The price increase happened overnight, without warning, and came not from the President but from an announcement by Pertamina’s subsidiary, Pertamina Patra Niaga. Talks of a new direct cash transfer program also came from National Economic Council (DEN) head Luhut Pandjaitan, who was called to the Presidential Palace for a completely different agenda.

Meanwhile, at his latest public address, President Prabowo showed no qualms about mentioning the price hike. Instead, he continued to mock dissent by calling on attendees to ignore those who snide at the government, insinuating his infamous rhetoric about foreign stooges.

Like Prabowo, then-president SBY was not brave enough to announce the price increase himself. But many of his ministers stepped in to assure the Indonesian public that they would be compensated, including Finance Minister Chatib Basri and Coordinating Economic Affairs Minister Hatta Rajasa.

Notably, the SBY administration had already warned the Indonesian public about a price hike for months, even before the Taper Tantrum, which assured the finance minister that fuel subsidies had to go.

They understood that managing a crisis was as much about managing perception as about managing the budget, especially for a politically sensitive issue like the fuel subsidy.

That lesson, it seems, has not made the trip from one administration to the next.

Lessons for the present day

Learning from this experience, Indonesia should be able to overcome today’s economic spiral despite widespread signs of pessimism. The key, however, lies in whether the current administration is willing to show enough humility and take the necessary steps to address systemic policy gaps.

As Chatib employed policy mechanisms in 2013, the same framework can be applied today to reverse the trend. In fact, in his recent public appearance at the Grab Business Forum, he provided a glimpse into the country’s current economic outlook.

He mentioned that the role of the finance minister is simple: either to earn more revenue, spend less, or borrow more money to ensure the stability of the Indonesian economy. Easier said than done, but entirely possible given the government’s ability to stabilize the economy a decade prior.

In his diagnosis, Chatib also pointed to Indonesia’s rising Credit Default Swap (the premium a lender pays to protect itself against the risk that a sovereign entity defaults on its loans) well before the war between the United States and Iran erupted. Take a look at this graph:

At the start of January this year, the CDS stood at around 68 basis points (bps). By the end of February, right before the US-Iran war started, that number jumped to 83 bps, up 14 bps, or roughly 22 percent.

This meant that even before the war brought about an oil crisis, foreign lenders had already begun to lose confidence in how the Indonesian government was carrying out its policies, to the extent that they were willing to pay a higher premium to protect themselves against the risk that the government might fail to repay its loans.

But the CDS serves more as a perception-based insight than as a reliable reflection of whether Indonesia will spiral into a great recession. It means the higher the CDS, the more foreign investors perceive Indonesia as riskier to invest in than before; nonetheless, they remain willing to invest in the country if they are better protected.

For the government, as Chatib explained, the rising CDS cannot be attributed to external factors alone. Rather, it is a reflection of questionable domestic policies that have strained capital trust.

External shocks are one thing. But what matters more is that investors want to see clean and prudent governance. Instead, they see the problematic implementation of the state-budget-straining Free Nutritious Meal (MBG) program, the rent-seeking tendencies of the centralization of commodity exports, and the increasingly prevalent criminalization of policymakers.

The Taper Tantrum was just as unexpected as the US-Iran War. Yet the government was willing to make unpopular decisions quickly and communicate them honestly to ensure long-term stability of the Indonesian economy.

In 2013, Indonesia surprised the world. Whether it can do so again depends less on the complexity of the policy tools available and more on the political will to use them.

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The arrest of Dadan Hindayana, the Head of the National Nutrition Agency (BGN), along with his two deputies, was nothing short of dramatic. But are we surprised?

We all saw it coming. The agency, which administers the implementation of President Prabowo’s flagship Free Nutritious Meal (MBG) program, has been under public scrutiny due to its massive Rp 268 trillion in state funding. But the nationwide initiative was rolled out under a cloud of systemic vulnerabilities: vague accountability mechanisms, opaque kitchen partnerships, and a rush for scale.

The Attorney General’s Office (AGO) alleged that Dadan and his deputies funneled lucrative kitchen management contracts through personal, closely tied foundations. It exposes how vulnerable the program was to greed. A multi-billion-dollar procurement budget, coupled with the decentralized distribution of daily meals and a lack of strict governance, has turned public welfare into a private feeding frenzy.

Yet, as devastating as this scandal appears in the headlines, it offers the government a rare political gift: a clean slate to start over.

It’s no secret that bureaucratic failures often trigger defensive PR campaigns to save face. But in BGN’s case, there is no need to play defensive. There is no face left to save for the previous management. Now that the rot has been excised, the government should just openly admit that the initial governance framework was deeply flawed.

This arrest may not be the death knell of the MBG program, but rather a signal of a chaotic, necessary rebirth towards its institutional maturity.

That said, we are seeing somewhat encouraging indications that the new leadership intends to use this crisis wisely.

Immediately after her appointment, the new BGN head, Nanik S. Deyang, announced a moratorium on the construction of new Nutrition Fulfillment Service Units (SPPGs). Despite her own controversies (which include dismissing criticisms of MBG), Nanik’s new direction for MBG is a necessary operational brake the program needs.

Civil society groups have warned for months that the expansion of these partner kitchens without established standards was fertile ground for procurement fraud. Pausing the expansion, on the other hand, will allow the government to freeze the bleeding, audit existing sites, and restructure operations without the pressure to hit arbitrary rollout targets.

Nanik also mentioned that she would refocus the program to prioritize beneficiaries in the “left-behind” (frontier, outermost, and disadvantaged, or 3T) regions. This is a welcome change. Rightly so. But Nanik was quick to follow up by stating that MBG in the 3T regions should be funded through contributions from foreign partners and philanthropies rather than relying on the state budget.

That statement makes one raise their eyebrows as it brings us back to square one: BGN sees evidence of inefficiency, but immediately shifts the burden elsewhere rather than addressing the root cause. If stopping MBG is out of the question for this administration, then at least they must stop the leakage of trillions of public funds.

Learning from this brouhaha, the new administrators should acknowledge that corrupt officials have been exploiting blind spots in MBG implementation, which originated from the administration’s impetuous appetite to achieve “greatness” (millions of people fed, thousands of kitchens built, millions of new jobs created) overnight.

Thus, if they want to go on, this is the momentum to first rethink what MBG wants to achieve and, thus, how best to design the program to get there. (We’ve previously argued in this article that MBG is unsure of what problem it wants to solve.)

Obviously, when they figure this out, they also need to address operational problems that have been the cherry on top of this whole fiasco: ensure standardized and transparent procurement, empower independent oversight, and prioritize quality over velocity.

A chance to course-correct

The President’s decisive purge of the old guard proves that the administration understands the stakes. Let’s be realistic: the MBG program cannot and will not be rolled back. It is the defining campaign promise of this administration, and millions of families are already counting on it. But precisely because it is here to stay, the government must treat this crisis as an unprecedented, probably unrepeatable opportunity to course-correct.

The moratorium and the arrests are aggressive first steps in the right direction, but they are just the prologue. We urge the government to follow through with absolute, unyielding structural reforms. This is the moment to drop the political theater, build the system the right way from the ground up, and ensure that a program meant to nourish the nation’s children would not serve to line the pockets of its elites, ever again.

This article first appeared in Kenapa Harus Peduli in Indonesian, written in response to The Reformist’s vol. 28 on cultural heritage and museum management reform.

In recent years, public discourse about cultural heritage has gotten increasingly popular. At first glance, it gives the impression that the state has been paying serious attention to the largely ‘abandoned’ cultural sector. However, such narratives primarily grapple with surface-level debates that overlook a fundamental issue: how is culture actually understood, and for whose interests are these agendas executed?

That is why we found this Reformist article titled “Why is it so difficult for ‘Wonderful Indonesia’ to make culture a priority?” both intriguing and ironic.

First of all, we’d like to concede that the author has commendably mapped valid problems. The Indonesian government has indeed paid little attention to its cultural heritage, as proven by the lack of budgetary support. They also astutely contextualize the repatriation of artifacts within the history of Dutch colonialism in the archipelago.

The problem, however, is the author’s state-centric approach, reducing the cultural crisis to mere managerial issues. Cultural heritage is imagined as an inanimate object that needs to be “managed well” in museums, strictly through administrative reform.

While this perspective is not entirely wrong, it becomes problematic when it fails to recognize that neither cultural heritage nor museums is ever a neutral entity.

We’d like to offer three critical notes. First, The Reformist’s article positions the government as the primary actor in managing cultural heritage, while it might not be. Second, the article’s illusion of decolonization stops at the repatriation of artifacts, without dismantling coloniality. Third, the article tends to center institutional reform as the primary solution without examining its accompanying limits and contradictions.

What is a “cultural heritage” and who decides?

Just as our understanding of inheritance often becomes an object of dispute, cultural heritage is equally an arena of contestation. Something becomes cultural heritage not simply because of its high intrinsic value, but because an authority in power deems it worthy of preservation and institutionalization.

This dynamic is captured by the concept of the Authorized Heritage Discourse (AHD), which describes the professional practices that institutionalize cultural heritage to legitimize an “official interpretation” of the past. The government has a structural advantage that enables it to play a dominant role in defining the nation-state’s identity.

In the context of The Reformist’s article, AHD is highly apparent when the Indonesian government is positioned as the principal actor in determining the direction of cultural preservation. But studies have indicated that this framework poses significant problems for public participation, or the lack thereof.

The current regulation, Law No. 11/2010 on Cultural Heritage, has yet to fully grant latitude to non-governmental actors to independently determine what cultural heritage is important to them and the best ways to preserve it for future generations.

Indigenous peoples and local communities are treated as the Other, whose voices and knowledge are not truly considered a valid epistemic foundation. Furthermore, heritage discourses tend to fixate on material dimensions alone.

Stripped of its living context, cultural heritage is prone to being reduced to something purely technical: a problem that can be resolved simply through governance reform, institutional modernization, and regulatory improvements.

It is unsurprising, then, that the “success” of cultural heritage is measured by how professionally it is managed and by the extent to which it meets global standards that stem directly from Western knowledge paradigms.

Half-hearted decolonization

If we are to truly address the “elephant in the room” when talking about Indonesia’s cultural heritage issues, the next necessary step should be to deconstruct the reality that its management systems and interpretations remain highly centered on the interests of those in power—and the coloniality that has yet to crumble.

Obviously, Indonesia is no longer under Dutch East Indies rule, but many of its cultural heritage institutions operate with a mindset akin to that of the former colonizer. Even the National Museum of Indonesia participates in reproducing the colonial gaze in its representation of Indonesian history.

This coloniality feels increasingly palpable when we observe the celebrations surrounding the repatriation of artifacts to Indonesia.

Repatriation becomes a stage for state political performance; celebrated as a diplomatic victory and a resurgence of national dignity, with state ceremonies and heroic narratives about bringing the nation’s history home.

Cultural heritage, here, manifests as “symbolic capital”. A value of prestige and honor that converts into political legitimacy for the regime.

Such is the very issue that needs to be criticized about the approach taken in The Reformist article. The author moves too swiftly toward institutional optimism without sufficiently challenging the colonial nodes that still shape the understanding and management of cultural heritage in Indonesia today.

We could see it in the way the state fails to resolve various crucial issues within the domestic cultural landscape, from evicting indigenous people from their living spaces and the commercialization and illegal sale of artifacts, to the destruction of cultural heritage and the marginalization of local communities from decision-making processes related to their cultures.

Indigenous communities’ cultural heritage, having been uprooted from its living context by European colonialism during the Dutch occupation, is at risk of undergoing a second uprooting through the centralization of Indonesia’s cultural heritage authority.

Repatriation brings heritage items home—yes. But it merely shifts the center of historical legitimacy from the colonial metropole to the national capital.

Another problem arises when museum reform in Indonesia is directed to follow the standards of Western institutions. The Reformist article views the British Museum model as a crucial step toward more professional museum governance. The issue is that the British Museum itself grew from the accumulation of colonial wealth and to this day remains the most naked symbol of colonialism itself.

Therefore, we must be deeply cautious when adopting such institutional models, as blindly replicating them risks importing the very power dynamics we seek to dismantle.

Reform, or commodification?

During his tenure as the Director-General of Culture in the then-Ministry of Education and Culture, Hilmar Farid proposed improving and utilizing “cultural infrastructure” as a form of “cultural investment”. But the use of cultural infrastructure, including museums, should not limit public participation, technological upgrades, or improvements in internal management.

Enthusiasm for the repatriated artifacts must be followed by practical understanding of their management and use, for the good of the people, education, and science. Even if some repatriated artifacts possess neither sacred value nor functional use in our modern society, access to them as research objects must be guaranteed.

Law no. 66/2015 on Museums specifically mentions the use of museums, among other things, for research, thereby making such research compulsory for museum administrators, individuals, or customary law communities (masyarakat hukum adat) under the authorization of the head of the museum.

But despite being legally mandated, information on the authorization process for conducting research in museums is not yet widely available. Thus, the stereotype of museums as decrepit institutions hinders effective research efforts.

The establishment of the Culture Ministry, however, has led to significant changes in the conception of Indonesia’s cultural policies, focus, and budgets. But even before making Cultural Affairs a standalone ministry, the establishment of the Indonesian Heritage Agency (IHA) as a Public Service Agency (BLU), which manages state-owned museums nationwide, shifts a considerable share of operational costs onto museums, forcing management to address funding challenges.

This has led museums to be rebranded as recreational destinations. For instance, the installation of Imersifa room in the Indonesian National Museum, which on the surface provides a pragmatic solution: the public goes to the museum, pays the entry ticket, enjoys the installation, takes some pictures, and then departs.

This approach to public participation could be misinterpreted as viewing the public as a market for the museum, shifting museums from activating their spatial place as a part of public space in a balanced way to extreme commodification. The selection of artifacts installed in the exhibition hall and the museum’s main narratives would become subjects that constantly adapt to changing public tastes and political interests.

Indeed, museums have recently become photogenic weekend destinations, yet all the artifacts on display become meaningless. It looks modern, but the relationship between society and its cultural heritage becomes severed and distant.

If we keep on positioning the state as the authoritative party on interpreting and developing Indonesian culture, every change of ruling groups in Indonesian politics, with their own logic on the collection management issues, would impact the public access to the artifacts and the kind of narratives that have been manufactured by it, in turn reducing public initiatives.

Beyond our time

Cultural heritage always becomes an arena of negotiation between political and economic interests. It also became an arena for creating kinds of memories that would be passed down to future generations.

Museum reforms should be understood as an interactive process. Both the public and the government should act as equal partners in utilizing the obtained cultural heritage for the betterment of all. Limiting our view to the government as the only authoritative party would narrow the room for exploration together. The public has the right and the capacity to participate even more deeply in the cultural ecosystem, since they are, in fact, the main engine driving it.

The repatriated cultural heritage as a part of the assets of the Indonesian cultural ecosystem offers massive potential to explore new fields of research, development of new disciplines and methodological approaches, and even provides a new career pool for humanities scholars and workers, especially with the emergence of new opportunities for researching the artifacts, or other activation programs.

Following the 2022-2023 Indonesian repatriation program, the Cultural Heritage Scholarship Programme for Indonesia (CHS) was established in 2024 through a joint Dutch-Indonesian effort, targeting early scholars and master’s students from Indonesia interested in enrolling in graduate programs at four leading Dutch universities.

Intensive cooperation between Indonesia and the Netherlands also commenced via the Rijksdienst van het Cultureel Erfgoed (RCE), which itself is part of the Ministry of Education, Culture and Science of the Kingdom of the Netherlands. Other overseas counterparts on the joint works also include the cultural consultative agency DutchCulture and a bipartisan agreement between Dutch and Indonesian universities.

The “caderization” of new researchers using education as the channel is the first important step. Preparing the implementation of the new knowledge gained by these first waves of cultural heritage specialists who are intended to manage the Dutch repatriated artifacts should become the next top priority.

Another issue is knowledge reproduction. The development of cultural heritage management in Indonesia should never depend solely on frameworks and methods derived from foreign countries or foreign researchers. Specific problems of cultural heritage management in Indonesia would never be similar with other countries.

There would also be different interpretations of the artifacts and their utilization for the Indonesian public. This would breed different results, methods, theories, and actions. Foreign researchers’ contributions in this field should be positioned as guidelines and tools for comparison.

Active public participation in cultural heritage issues would help foster a closer connection with the objects themselves, ensuring a more reflective and grounded approach to the creation of Indonesian history as a shared collective memory. This subsequently produced a more critical approach to Indonesian national consciousness.

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Nine months ago, a collective of more than 400 Indonesian economists, under the Alliance of Indonesian Economists (AEI), published seven demands directed at the administration of President Prabowo Subianto just before he completed his first full year in office.

Among other things, the AEI questioned President Prabowo’s unwillingness to evaluate his populist Free Nutritious Meals (MBG) and Red and White Village Cooperatives (KDMP) programs, which have continued to receive his full political backing despite their evidently problematic conception, implementation, and budget allocation.

Nine months later, these demands seem to have fallen on deaf ears. The Rupiah has hit a historic low. The IHSG contracted by 35 percent in the past five months. The central bank’s independence has been put under the microscope, all while we’re witnessing, in real time, how state intervention continues to choke the economy.

Amid the chaos, the President, on the other hand, has just returned from his 54th overseas trip in only 19 months since assuming office.

What is going on in Indonesia?

To answer that, we thought it’d be a good idea to look back at the AEI’s seven demands from nine months ago. We think they have remained relevant and, most importantly, might just be what the government needs to course correct:

1. Comprehensively rectify budget misallocations and reallocate them to policies and programs fairly and proportionally.

2. Restore the independence and transparency of state institutions

3. Stop state dominance that risks weakening local economic activity

4. Deregulate policies, permits, and licenses, and simplify bureaucracy

5. Prioritize policies that address inequality across its various dimensions.

6. Restore evidence-based policymaking and technocratic decision-making processes, and eliminate populist programs that undermine fiscal stability and prudence.

7. Improve the quality of institutions, build public trust, and promote sound governance of state administrators and democracy.

In this edition of The Reformist, we are keeping tabs on the government’s seven economic sins and how these seven demands could’ve (and would’ve) prevented the fiasco unfolding before our eyes today.

1. Gluttony: Budget misallocations

The AEI’s first demand is for the government to rectify budget misallocations across the state budget, most notably in the costly MBG and the President’s other flagship programs.

When the demand was made last September, Indonesians were only just beginning to feel the effects of a sweeping political and economic restructuring under the Prabowo cabinet. Through Presidential Regulation No. 1/2025, the government imposed widespread austerity cuts that gutted longstanding budget transfers to local governments, slashed ministerial allocation, and wound down several programs inherited from the previous administration.

Much of the fiscal space freed by these cuts was then redirected toward Prabowo’s pet projects. MBG bore the most visible price tag. In 2025, it received an initial allocation of Rp 71 trillion, already a substantial commitment for a program still finding its footing.

This year, that figure has skyrocketed to Rp 335 trillion, before being cut down to Rp 268 trillion recently. Mixed in the ensuing controversy was MBG’s classification as an education expenditure, a budget category constitutionally required to receive at least 20 percent of total state spending. In practice, this means a substantial share of Indonesia’s education budget is now spent on a program that has been spoiled by food poisoning incidents, rent-seeking, and, most recently, the arrest of Dadan Hindayana, Head of the National Nutrition Agency (BGN), by the Attorney General’s Office on corruption charges.

While the government has made some concessions, the broader fiscal posture has changed little, if at all. Local transfer funds (TKD), which finance essential public services across the archipelago, remain under pressure, while the KDMP pushes ahead with its rollout across tens of thousands of villages, drawing on both village funds and state financing despite limited evidence of economic impact to justify such a large-scale intervention.

Nine months since the AEI made their demands, the populist burden on the state budget has not diminished. So far, it has merely been rearranged.

2. Envy: Undermined institutional independence

The AEI’s second demand is for the government to restore the independence of state institutions. Back when it was written in September 2025, concerns about Bank Indonesia (BI), the country’s central bank, had begun to surface. From burden-sharing arrangements during the COVID-19 pandemic to political pressure for lower interest rates, debates around BI’s independence are hardly news, as Prabowo never shied away from publicly pushing the envelope further.

In many instances, the administration repeatedly signaled its expectation that BI would “support” Prabowo’s 8-percent economic growth target—even amid a weakened rupiah and monetary deterioration. When Prabowo appointed his nephew, Thomas Djiwandono, as BI’s Deputy Governor, economists and market observers saw it as an unnecessary politicization of an institution whose credibility rests heavily on its perceived independence. On 4 June 2026, the House of Representatives (DPR) passed an amendment to the P2SK Law, which extends BI’s responsibilities to include supporting economic growth and job creation, in addition to maintaining monetary stability.

A dual mandate is not unprecedented. The US Federal Reserve, for example, balances price stability and employment objectives. But this is where context matters most: in an administration that has already placed a family member within the leadership of its central bank, concerns over institutional independence are inevitable.

Yet this story extends beyond the central bank. The independence of many other state institutions has weakened. For example, the Corruption Eradication Commission (KPK) is a shell of what it once was before then-president Joko Widodo amended the KPK Law in 2019. In turn, the AGO has emerged as the primary anti-corruption law enforcement. From the Rp 200-trillion Pertamina adulterated fuel scandal and Tom Lembong’s sugar import case to the recent Nadiem Makarim’s Chromebook trial, the AGO has steadily positioned itself at the center of some of the most prominent graft investigations of recent memory.

As the AGO’s role expands while the KPK weakens, questions arise over who gets investigated, which cases are prioritized, and how much influence political considerations have on law enforcement.

Nine months since the AEI made their demands, patterns of institutional intervention have only become clearer. There is no question that institutions exist, but can they really keep political leaders in check when the lines have blurred?

3. Lust: Unrelenting market interference

The AEI’s third demand is for the government to stop state dominance from crowding out the local economy. Today, it’s clear that they have chosen an entirely different path.

Rather than fulfilling its role as a regulator, the government has made it clear that they want a piece of the market share. Through the military, the police, state-owned enterprises, and flagship programs, the government has significantly increased its footprint in Indonesia’s economy.

The MBG program provides the clearest example, through the Nutritional Provision Service Unit (SPPG) kitchens serving as all-in-one intermediaries responsible for procuring, producing, and distributing meals to schools. The rapid expansion of SPPGs has created appealing opportunities for rent-seekers who view MBG’s lucrative contracts and minimal oversight as a breeding ground for politically connected or state-affiliated actors. The police, for example, own over 1,179 SPPGs as of February this year. Meanwhile, the military had already claimed 452 branches by the end of 2025, with a stated ambition to scale to 2,000 kitchens this year.

Politicians have not been shy about participating either. Late last year, the daughter of a South Sulawesi legislator was found to have registered ownership of 41 SPPG kitchens, despite regulations limiting ownership to a maximum of ten units per individual.

The market raids by political and state-linked actors go far beyond MBG. Both the police and the military have been spotted cultivating farms at food estate program sites and building KDMP offices, marking further encroachment by security forces into the depths of local economic activities.

At the national level, the same pattern emerges through Danantara, Indonesia’s sovereign wealth fund, which consolidated all state-owned enterprises (SOEs) under its management and holds over USD 900 billion in assets. Despite the sovereign wealth fund label. In reality, the agency has served more as a means of circumventing the state budget to advance the administration’s political goals with little to no scrutiny.

Late last year, it injected Rp 23.67 trillion into the chronically loss-making Garuda Indonesia, reducing the airline’s public float from 27 to just 7.96 percent. More recently, Danantara confirmed it had acquired a minority stake in GoTo, with reports suggesting an ambition to become a majority owner. As of now, the greater concern is that accountability mechanisms remain weak relative to the scale of the assets they manage.

The latest and perhaps most brazen example is PT Danantara Sumberdaya Indonesia (DSI), which now requires all exports of palm oil, coal, and ferroalloys to be routed through a single state intermediary.

The government argues such an arrangement is necessary to combat under-invoicing and improve oversight of strategic commodities. But we have seen how this played out before—most notoriously through the New Order’s Clove Buffer and Marketing Agency (BPPC), where crucial commodities were controlled by not only the state, but by then-president Suharto’s family and their cronies, to enrich themselves at the expense of local producers and the broader economy.

Nine months since the AEI made their demands, the concern is no longer about how much the government interferes in the market, but rather that it has increasingly become the administration’s default playbook to fulfill its unchecked political ambition.

4. Pride: Half-hearted deregulation

The AEI’s fourth demand is for the government to deregulate policies, permits, and licensing requirements that have long impeded a healthy business and investment climate in the country. They specifically criticized the increasingly costly and ineffective Local Content Requirement (TKDN) policy, which President Prabowo has publicly acknowledged as too rigid.

In September 2025, the Industry Ministry issued Ministerial Regulation No. 35/2025, which overhauled the existing TKDN certification framework. The new regulation simplifies the certification process, extends the validity of certificates, and introduces additional incentives for firms that build domestic production facilities, employ local workers, and establish local supply chains.

While this was a step in the right direction, little has been done to shift perceptions. TKDN remains a point of contention; for example, when the United States explicitly sought an exemption in the US-Indonesia trade agreement, it suggested that foreign investors remain unconvinced.

Most importantly, TKDN was never the root problem. It is that individual regulations are implemented inconsistently, creating legal uncertainty. When the China Chamber of Commerce sent a letter addressed to President Prabowo expressing alarm over the deteriorating business climate in Indonesia, they cited policy uncertainty, prevalent extortion by third-party actors, and excessive interference by law enforcement authorities as major obstacles to operating in Indonesia.

The letter was damaging enough that the head of the National Economic Council, Luhut Binsar Pandjaitan, felt compelled to publicly apologize to investors for the current state of the Indonesian economy during a speech in Singapore. If a senior government official has to come out of his way to offer a public apology, then the gap between the promise of deregulation and realities on the ground could not be more apparent.

Nine months after the AEI made their demands, investor confidence remains fragile, while the government seems unwilling to address the broader governance problems that could heal that trust.

5. Greed: Widening inequality

The AEI’s fifth demand is for the government to introduce policies that seriously address inequality across its many dimensions. Indonesia’s labor market tells the most urgent part of that story. Between 2019 and 2025, Indonesia lost more than 11 million members of its lower-middle class, with only 416,000 new members joining the middle and upper classes. In other words, for every Indonesian climbing the economic ladder, way more fell through the cracks.

On top of that, the informal sector has become increasingly dominant—making up 57 percent of the workforce—meaning more people live on an unsteady paycheck and face greater economic vulnerability. It certainly doesn’t help that only 15 percent of those informal workers are covered by BPSJ Ketenagakerjaan, Indonesia’s social protection program.

Against today’s backdrop, the lack of social protection represents perhaps one of the most glaring policy failures of past and current administrations. The government’s decision last year to lower BPJS Ketenagakerjaan monthly premiums for informal workers from Rp 16,800 to Rp 8,400 was expected to incentivize enrollment but fell short of addressing the real problem at hand.

Such a habit of choosing the ‘easiest’ way out when faced with complex problems—as opposed to addressing the structural gaps—has unfortunately become what most, if not all, of us expect of this administration.

The AEI’s demands also touched on energy subsidies policy, where—again—this administration has chosen the path of least political resistance. Rather than reforming the subsidy regime—which disproportionately benefits higher-income households that own more vehicles than those who actually need a leg up—the government has left subsidized fuel prices untouched despite well-established concerns about Indonesia’s ability to keep the charade up amid escalating geopolitical tensions that continue to disrupt global energy supply chains.

While reforming fuel subsidies has always been politically tricky, this administration has made no effort to even consider targeted policy mechanisms, such as direct cash transfers or a shock-treatment scheme for lower-income households. It’s disappointing, to say the least, but hardly surprising.

Nine months since the AEI made their demands, we’re still at an impasse. The government has no coherent strategy and, worse, no sense of urgency in communicating its plan of action. It’s even more ironic that this administration comprises the largest cabinet in our history.

Who knew that more isn’t always merrier?

6. Sloth: Impulsive policymaking

The AEI’s sixth demand is for the government to abandon its impulsive policymaking and return to evidence-based, consultative, iterative, and technocratic processes. Nine months on, the diagnosis has not only persisted, but arguably worsened. More policies have instead emerged seemingly on a whim without rigorous deliberation.

Prabowo’s hasty policymaking is perhaps best illustrated by Danantara, which was announced one month into his presidency despite never being mentioned during his presidential campaign. Within four months, Danantara was granted authority over one billion dollars in Indonesia’s state assets before its governance framework was even close to being properly established.

When Prabowo announced the export body DSI two weeks ago, we saw the same pattern reemerge. With no buildup whatsoever, the new agency was set to start operations this month. Days prior, the government had just rolled out a new policy requiring exporters to retain their earnings in state-owned banks and convert 50 percent of those funds to rupiah. Whimsical policies like these make it hard to blame the Chinese investors for what they complain about in their letter. It’s almost like this administration is on a mission to always double down on something where all the signs say they’re wrong.

Whether Danantara ultimately succeeds or not is besides the point. Entrusting any newly formed institutions with such extraordinary powers is simply preposterous.

Many have also pointed out Prabowo’s comical tendency to promise to include a new foreign language in the school curriculum based on the country he visits. First came Portuguese, which he said after meeting the Brazilian President Luiz Inácio “Lula” da Silva, and then, more recently, French, during his latest visit to meet President Emmanuel Macron in Paris.

Nine months since the AEI made their demands, we continue to be served new policies that seem to be all vibe with no evidence to back it up. But the scariest part of it all is that while it took President Prabowo less than two years to do all this, undoing the damage won’t be as speedy—that is, if we learn anything from what has transpired so far.

7. Wrath: Broken public trust

The AEI’s seventh demand is for the government to improve institutional quality, strengthen democratic governance, and repair public trust. On this front, the government has done very little to quell concerns.

Since taking office, President Prabowo has personally presided over a broad expansion of the military’s role in his administration. Among other things, he has deployed TNI personnel not only for policing tasks but also for running SPPG kitchens, building physical infrastructure, and planting his food estate dreams.

The broader democratic picture offers no reassurance. Discussions about eliminating direct local elections, crackdowns on freedom of speech, and unempathetic public communications leave public trust in the government hanging by a thread.

In mid-March, a group of military intelligence personnel attempted to assassinate human rights activist Andrie Yunus by attacking him with corrosive acid. Andrie has been a well-known critic of the military’s encroachment into civilian affairs since Prabowo took office. When the online media outlet Magdalene published its investigation of the case, the government was quick to restrict access to it—only to walk it back a few days later amid loud public outcry.

Over on the police side, things have not exactly been better by any means. While the military has been the subject of stronger scrutiny as of late, the government’s lack of urgency in advancing police reform in the aftermath of the killing of Affan Kurniawan during the August 2025 protest has only strained public confidence further.

Yet perhaps the most revealing of it all is how the government—particularly President Prabowo—has chosen to deflect any and all criticisms, from “villagers don’t use the dollars anyway” to “why don’t you just escape to Yemen then”.

Nine months after the AEI made their demands, public input has not only been dismissed but also often ridiculed or even penalized. Without accountability, the government risks losing sight of its most crucial duty: to listen.

Where to go from here?

Perhaps what is most concerning is not what other bad policies the government has come up with, but the extent to which it is willing to defend its policies through coercive and intimidating tactics rather than step away from its ivory tower to listen carefully.

That none of the economists’ concerns have been meaningfully acted on nine months later is, in many ways, a direct consequence of this. It is no secret at this point that channels of communication to the President are extremely difficult under this current administration. Information either comes from an individual close to the President or goes through a rigid, selective information tunnel through Cabinet Secretary Teddy Indra Wijaya.

The effect of hollowing out dialogue is exactly what is happening to the country right now. Investors, markets, and civil society at large are reluctant to take part in a society that fails to listen to its people. Reversing the Rupiah’s downfall or revising the MBG may take time, but if the government is truly serious about upending the current situation, it may need to lower its ego and allow room for dissent, sending the right signal that change is possible.

Writer/Researcher:

Editors: , ,

The authors are analysts at the Supreme Audit Agency (BPK). This article reflects the authors’ own analysis and views and does not necessarily represent the official positions of their employers or those of The Reformist.

Every year, over 200,000 Indonesian Muslims perform the annual Hajj pilgrimage in Saudi Arabia. With millions of registrants, hundreds of thousands of annual departures, and coordination across domestic agencies and partners in Saudi Arabia, managing the Hajj is one of Indonesia’s most complex public services.

A sharp lens on these complexities can be found in the 2025 Hajj audits conducted by the Supreme Audit Agency (BPK). The report flagged financial inconsistencies and highlighted the need to address segments of Hajj governance that must be accounted for.

Successful Hajj governance should not be measured only by the absence of major issues during the pilgrimage. It requires fair queue management, rigorous data verification, clear cost structures, and readiness of health and operational services before any pilgrim touches down in Saudi Arabia.

A previous Reformist article has noted public expectations for the Hajj around four key principles: transparency, care, reliability, and spirituality. This is where the 2025 BPK audit findings sharpen the discussion, providing valuable insights into principles that must be translated into tangible controls well before pilgrims depart every year.

Satisfaction is commendable, but it does not tell the whole tale

The 2025 Hajj saw several positive results: the Pilgrims Satisfaction Index rose from 88.20 to 88.46, over 99.9 percent of the pilgrim quota was filled, and pilgrims received improved meal services. The government also introduced Istithaah (the Islamic principle that a pilgrim must be physically, mentally, and financially capable of performing Hajj) requirements before final payments are made. These achievements are important and deserve recognition, since organizing departures and services for so many pilgrims in a short time can be very challenging.

But satisfaction indexes alone do not capture the full pilgrimage experience. For example, it does not capture whether the queue was fair, whether procurement was properly controlled, or whether public funds reached the right people. A pilgrim can feel well served in Makkah, while the system that determined their departure contained weaknesses in queue integrity, digital control, and fiscal discipline.

1. The integrity problem behind Indonesia’s Hajj waitlist

One main concern from the audit findings is that planning to fill the regular Hajj quota is incomplete and does not fully comply with Law No. 8/2019 on Hajj and Umrah Pilgrimage Administration. Indonesia’s national Hajj registration and queue management database (SISKOHAT) remains faulty with glaring weaknesses.

For instance, the system lacks sufficient controls to verify data for merging mahram—a male guardian whom Islamic law requires to accompany a woman during Hajj, typically a husband or close blood relative—nor can it transfer quota numbers from ineligible pilgrims to new replacements.

Other weaknesses include missing checks for file completeness, reliance on manual verification, inadequate control over verification steps, the use of shared accounts, and poor separation of duties. These increase the risk of abuse and can delay eligible pilgrims.

Another finding revealed that Rp 161.73 billion in public Hajj funds was spent to cover the pilgrimage costs of 4,760 individuals who did not meet departure requirements. This group includes 504 pilgrims who had performed the pilgrimage within the past ten years, 2,682 with non-familial mahram combinations, and 1,574 with portion transfers that did not comply with regulations.

With long queues, every seat matters. Poor verification burdens potential pilgrims who are sidelined despite meeting all Hajj requirements.

2. More providers, more coordination gaps

In 2025, the Multisyarikah model—a system in which Hajj services are distributed across multiple providers in Saudi Arabia—was used for the first time, allowing services to be shared among several providers. However, this poses significant coordination challenges, especially when a flight group is linked to more than one provider.

BPK finds that visa services for regular pilgrims are still lacking. Preparing pre-manifests and manifests is not fully in sync with how services are divided among companies. As a result, some groups are served by more than one company, and service allocation does not always follow the rules.

These coordination problems are especially clear in Armuzna services, the collective term for the three sacred sites of Arafah, Muzdalifah, and Mina, where key Hajj rituals are performed. Changes to the departure plan were not well planned. This led to delays, insufficient transport fleets from Muzdalifah to Mina, too many pilgrims at the markaz, overcrowded tents, and supplies being sent to the wrong places. These problems show the need for clearer work instructions and better coordination in using the Multisyarikah model.

3. The medical service blind spots of Hajj administration

Health services also need special attention. The BPK report found that some health goods and services have not fully met contract terms or have not been used enough. The Indonesian Hajj Health Clinic in Mecca is underused because its Civil Defense certificate—an official emergency-safety license required by the Saudi Civil Defense before any facility can legally operate—had not yet been issued at the time of the audit.

Medicines and health supplies worth Rp 2.61 billion were also reported to have a shorter shelf life than legally required, meaning that they will be ineffective come next year’s Hajj season.

On top of that, Rp 1.74 billion in polio vaccines have not been used despite Indonesian pilgrims being elderly or having pre-existing health risks. The volume of resources maintained does not align with actual needs in the field, resulting in public funds tied up in vaccine stocks that fail to provide adequate protection.

In this regard, the planning and procurement stages of Hajj health-related goods and services must be tied to verified needs and certification, which are to be completed before the season commences. That way, the government can detect weaknesses and mitigate risks before departure, rather than rediscovering them in the next audit report.

4. Addressing the corruption in the room

Improving Hajj governance also means looking at how costs are structured. BPK found that last year’s pilgrimage included Rp 64.37 billion in costs that were not directly related to pilgrim services. These include management activities, financial manager fees, financial operations, monitoring and evaluation, and support for asset maintenance in Indonesia. Taken together, these concerns paint a sad picture of potential rent-seeking that has no place for a sacred event like the Hajj.

Some governance activities are necessary to organize the pilgrimage, but it is important to separate costs that directly benefit pilgrims from those that are purely administrative or supportive. Without this clear separation, the Rp 87.4 million pilgrimage price point—determined by the government—becomes opaque, raising corruption concerns that have long plagued the Hajj sector.

Reforming the sacred, one institution at a time

Corruption and rent-seeking in Hajj affairs are not novel. A few years ago, corruption investigators alleged irregularities in the allocation of additional Hajj quotas, with state losses calculated at Rp 622 billion during the 2023-2024 season. In 2014, a former minister was convicted of misusing state Hajj funds. The structural lesson is consistent. Allocation rules that can be altered through opaque discretion create an avoidable risk of corruption.

Fixing this requires more than better administration. It requires governance architecture. The most urgent starting point is the institutions that govern the Hajj themselves.

SISKOHAT, for example, should function as an auditable rights engine rather than a passive database with no executive functions. Saudi Arabia’s Nusuk platform offers a useful design reference by integrating registration, verification, payment, and service authorization into a more traceable digital process. Indonesia does not need to replicate Nusuk, but it may benefit from the same design principle.

The Indonesian government should require Hajj authorities to build a parallel set of risk indicators that track system health before pilgrims depart. These indicators should cover visa mismatch rates, manifest revisions, procurement exceptions, unresolved complaints, and the follow-up status of BPK’s recommendations.

Public dashboards need not expose private pilgrim data. But they should make governance performance visible and contestable. A system that publishes its own risk scorecard before each departure season signals that it takes accountability seriously. One that waits for the next audit to surface the same recurring problems does not.

Indonesia already has the institutional experience, digital infrastructure, and audit diagnosis needed to improve Hajj governance. What remains is the discipline to turn them into enforceable controls before the next season begins.

Indonesian pilgrims deserve institutional justice, especially when millions of them have spent decades waiting patiently behind queues that can span over three decades, whilst having to deposit tens of millions of Rupiah, for a once-in-a-lifetime sacred act like the Hajj pilgrimage.

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“A policymaker is cursed to live in the second-best world,” warned Chatib Basri, the former finance minister who prefers to be called Dede (‘without Pak, please!’), as he has reminded me more than once.

Anyone who studied economics or public policy understands this: at its core, public policy is about tradeoffs. When faced with Options A and B, choosing one means letting go of some degree of opportunity cost. The discipline is all about minimizing this ‘loss’ across scenarios. For example:

• Should a government increase the number of sugar imports? Hold off, and domestic prices spike, leaving households squeezed and headlines unforgiving. Act too quickly, and the imports flood a market that didn’t need flooding, hollowing out local farmers.

• Technology C or W for a digitalization program? Option W avoids locking in annual subscription costs but demands a steep upfront price. Option C spreads the cost over time but ties the agency to a vendor for years.

• Should Rp 268 trillion go towards the free nutritious meal (MBG) program? For this one, I’m not entirely sure what the deliberation looked like. You’d have to ask the people in the room.

No decision can please everyone. There will always be winners and losers in any scenario. That is why criminalizing public policy decisions has a fundamental flaw: it fails to understand what public policy actually is about.

Of everything I studied in public policy school, this insight blew my mind the most. Managing something as complex and layered as national-level governance means accounting for a vast range of risks, including those that cannot be predicted at the time a decision is made.

A good decision, therefore, cannot be measured by good outcomes alone. It must be evaluated by the quality of the decision-making process itself:

1. Was it made based on the best available expertise and information at the time the decision was taken?

2. Was it made in consultation with those who would be significantly affected?

The world is puzzled as Indonesia continues to criminalize policy decisions

A policymaker is accountable for weighing all factors carefully, but they should be given room for bad outcomes.

When a legal provision is defined with rubber-like elasticity, every single decision becomes vulnerable to potential criminalization. Especially when, as we are all well aware, judicial processes are not always free from political pressure.

It’s worth acknowledging that not all cases are identical in degree:

• Tom Lembong’s sugar import case last year comes closest to a pure example. The decision he made—authorizing sugar imports to stabilize supply—was a textbook tradeoff call.

• Nadiem Makarim’s and Ibrahim Arief’s Google Chromebook case is more complicated. There are unresolved conflict-of-interest allegations that go beyond policy judgment.

Regardless, what these cases expose is a law that allows the line between administrative error and criminal liability to be drawn by whoever holds political power at the time, despite the absence of criminal intent.

Being a policymaker is a moral vocation that demands the highest level of competence. It is a job requiring genuinely hard skills, but one that is also a calling. Policymaking should be an arena filled with the nation’s best problem-solvers, with the strongest moral fiber. Criminalizing their judgment—without evidence of corrupt intent—does not invoke justice. It empties the room of anyone with the audacity to make hard calls.

So how do we prevent or punish a policy that actually harms the public?

The answer is governance. We can design processes that enable deliberation and accountability to occur before and during decision-making, rather than retroactively through criminal charges.

1. Layers of bureaucracy within the executive. There’s a reason mandates and authority are distributed across the President, ministers, and layers of civil servants below them. Those layers exist to create filters before any decision touches the ground.

2. Legislative and judicial checks and balances. For consequential decisions—like the national budget—the executive must secure legislative approval. In a healthy democracy, elected representatives have the power to halt executive policies deemed harmful.

3. Meaningful public participation. From formal mechanisms like Regional Development Planning Forums (Musrenbang) and public hearings to social media and street protests, governments should have ways to genuinely understand what the public wants—and why.

4. Capitalize on the electoral cycle. If nothing else, casting our vote is how we choose whether to continue a policy direction—or change course entirely.

I said that to my husband after watching the verdict videos for Ibrahim Arief and the prosecution’s charges against Nadiem. I cried for quite a while that night. I didn’t know why it caught me off guard because I already expected this to happen—I am not naïve about the politics of law and what is at play here.

My grief, I think, stems from witnessing the loss of humanity and agency of the entire legal system under political pressure.

I would never fully understand what incentives or threats each legal professional faces when they sit in that prosecutor’s chair or on that judicial bench. It’s impossible to know what they’re thinking, who they need to protect, or what other difficult considerations they carry.

What I do know is that millions are watching and understanding what is happening (the context beyond whether Nadiem is guilty or not guilty), worrying over the same potential injustice, while those with slightly more agency to change the outcome decided to stay put.

In the middle of all this, I hold on to a thread of hope in Josepha, the high school student from Pontianak who called out the panel of ‘expert’ judges in the Lomba Cerdas Cermat MPR. She used her agency to resist injustice.

Sometimes, what separates us as human beings is the split-second when we get to choose to let something happen or actually attempt to do something about it. Or in her case: to raise a hand, question a verdict, and try to change the outcome.

Perhaps we are all deeply invested in Josepha and Team C, because if we can’t get justice anywhere else, let us at least protect it for the next generation.

May those who still have the privilege to resist injustice keep resisting, no matter how small the space may be.

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Economists at Bank Mandiri estimate that one out of three Indonesians (86 million people) belongs to the “transitional middle class.” They’re not poor, but also not resilient enough to overcome shocks, according to former finance minister Chatib Basri, who dubbed the lower end of this economic class ‘fragile’. A job loss, for example, could instantly send them into poverty.

Between 2019 and 2025, Indonesia lost over 11 million of its lower-middle class, with only 416,000 new members in the middle and upper classes. What happens to those 10.5 million whose mobility went on a downward trajectory instead?

One might think—no worries, we have a social safety net. But what’s the catch?

The Workers Social Security Agency (BPJS Ketenagakerjaan) is Indonesia’s social security agency. It follows a provident fund scheme in which both employers and employees contribute a portion of their wages to the agency, which then manages the pooled funds through investment. In return, members are eligible for five different protections: old age (JHT), pension (JP), death (JKM), job loss (JKP), and work-related injury (JKK).

As of this month, only 30.6 percent (47.4 million) of Indonesia’s 154.91 million total workforce is enrolled in BPJS Ketenagakerjaan. This means around seven out of ten workers remain vulnerable to the sudden, unfortunately imminent threats of economic shocks, especially now as the Rupiah continues to plunge.

Unlike its healthcare counterpart, BPJS Kesehatan, BPJS Ketenagakerjaan does not provide universal coverage if a worker loses their source of income.

Despite sharing the same BPJS name, they are two separate institutions with fundamentally different problems. BPJS Kesehatan is grappling with mounting annual deficits, while BPJS Ketenagakerjaan faces the opposite challenge: a coverage gap, with too few Indonesians enrolled in the program despite the country’s massive labor force.

Without proper reforms and stronger political will, the agency will begin to collapse financially under the weight of what some see as negligence. In this edition of The Reformist, we will uncover the history behind Indonesia’s social security system and why it’s a ticking time bomb.

How it started

Before BPJS Ketenagakerjaan came into existence, there had been attempts to establish a nationwide social security system. The earliest came shortly after independence, when the infant government passed a law in 1947 to protect workers from work-related injuries and death. Little is documented about compliance during this era, but the passage of this law demonstrated that the need for such protections was recognized as a priority from early on.

Under the New Order regime, the foundations of a more systematic program emerged. Then-President Suharto issued Government Regulation No. 33/1977, which established the Workers Social Insurance (Astek) program and required all private companies and state-owned enterprises (SOEs) to enroll their employees. It followed in the footsteps of PT Taspen, Indonesia’s first-ever social security fund exclusively made for civil servants, established in 1963.

Astek was renamed Jamsostek after the government enacted Law No. 3/1992 on Workers Social Security.

During this era, compliance and coverage were very minimal and non-beneficial for active members. According to a 2003 report by SMERU Research Institute, only 16.1 percent of Indonesia’s workforce was covered by Jamsostek by 1998.

Both employers and employees reported unsatisfactory service, including pension payouts equivalent to just 7 percent of a worker’s previous wage and the same old, sluggish bureaucracy that delays claim requests. Beneficiaries perceived Jamsostek obligations more as a hidden tax than a safety net, making the social security system unattractive.

It wasn’t until after the New Order regime was toppled that social security reforms became a priority in political discourse.

The reforms were reflected in the Constitutional amendments:

• The second amendment in 2000 added Article 28H(3), which recognizes social security as a fundamental right of every citizen; and

• The fourth amendment in 2002 further strengthened this commitment through Article 34(2), which mandates that the state establish a social security system to preserve human dignity for all.

Two years later, then-President Megawati Soekarnoputri fulfilled this mandate by passing the 2004 Social Security Law. But its implementation did not materialize until 2011, after the Constitutional Court ruled in favor of a petition filed by a federation of labor unions. The reform finally took place through the passage of Law No. 24/2011 on Social Security Administration, transforming Jamsostek into BPJS Ketenagakerjaan.

In 2014, both BPJS Ketenagakerjaan and BPJS Kesehatan began operation. The latter saw immediate success, enrolling over 140 million Indonesians upon launch and achieving over 95 percent population coverage today, while BPJS Ketenagakerjaan lags behind.

How sluggish progress exposed glaring problems

With sweeping reforms in place, it is a shame that BPJS Ketenegakerjaan has retained the same sluggish coverage problem seen during the New Order regime. Of its 47.2 million active members, 26.65 million (56.5 percent) are formal workers, 13.86 million (29 percent) are informal workers, 6 million (13 percent) are seasonal construction workers, and the remaining 691 thousand (1.5 percent) are migrant workers.

BPJS Ketenagakerjaan today covers only 30.6 percent of the total workforce, meaning coverage has increased by only 14.5 percentage points 28 years into Reformasi. This exposes two glaring problems:

I. The neglected informal sector

Although BPJS Ketenagakerjaan is most often associated with traditional employer-employee arrangements, it also covers informal workers through a separate enrollment track. Ride-hailing drivers, small and medium entrepreneurs, food stall workers, and virtually any occupation without a formal contractual agreement fall within this category.

With over 85 million (55 percent of the workforce) working in the informal sector, BPJS Ketenagakerjaan covers only 13.89 million today. That is less than two out of every ten, whereas these informal workers are the most vulnerable to economic shocks, given their income uncertainty. Unlike BPJS Kesehatan, which offers contribution assistance (PBI), BPJS Ketenagakerjaan offers no subsidies whatsoever.

With membership strictly tied to monthly premiums, social security protection remains a privilege for the large majority of informal workers. On top of that barrier to entry, those who fail to pay their dues also lose their protection altogether.

It certainly doesn’t help that there is persistent confusion between BPJS Ketenagakerjaan and BPJS Kesehatan, as many Indonesians assume the two are the same or are completely unaware of the difference.

But it’s not that they are not trying. Under Government Regulation No. 50/2025, monthly premiums for informal workers were slashed to Rp 8,400—a 50-percent reduction from the previous rate of Rp 16,800—to incentivize enrollment. The agency has also launched grassroots dissemination programs to increase membership, aiming to reach 63 million members overall by the end of this year.

How much of that targeted increase comprises the informal sector is a test of its commitment to protecting informal workers.

II. Non-compliant employers get away with it

With around 26.65 million (excluding construction and migrant workers) of 59.93 million formal workers enrolled, more than 55 percent of Indonesia’s formal sector remains without a safety net. This is despite the 2011 law obligating employers to register their employees with the agency or risk a hefty fine of up to Rp 1 billion or up to eight years of imprisonment.

We now get to the common denominator of virtually every good policy in Indonesia: weak enforcement. But political will only explains half of the root cause. In 2021, the Ombudsman flagged BPJS Ketenagakerjaan for failing to expand membership, citing both poor administrative performance and a shortage of personnel within the Manpower Ministry to address non-compliant employers.

The limited number of labor inspectors within the Ministry of Manpower, who only operate at the provincial level, results in weak supervision and inadequate handling of public complaints. This, in turn, leads to low compliance among employers in enrolling their workers as BPJS Ketenagakerjaan beneficiaries,” said Hery Susanto, a member of the Ombudsman.

By the end of 2025, the agency’s supervisory council announced that more than 523,000 employers had yet to register themselves and their employees with BPJS Ketenagakerjaan. On top of all that, over 490 thousand of the 878 thousand registered employers (55.8 percent) do not fully participate in all five programs offered by the agency.

If the government is serious about creating a protected and strong workforce, then both BPJS Ketenagakerjaan and the Manpower Ministry must take firmer actions against non-compliant employers. Otherwise, the social security system is at risk of structural failure, which leaves everyone worse off.

The time bomb’s ticking

Without reforms aimed to address these structural challenges, it won’t be long until BPJS Ketenagakerjaan hits its ceiling and eventually implodes. In his book, Paradoks Indonesia (The Paradox of Indonesia), President Prabowo Subianto seems to be aware that the so-called demographic dividend is as much a challenge as it is a ‘bonus’.

That bonus is projected to peak in 2045, after which Indonesia’s population will begin to age rapidly. As is true in many countries that have had their bonus, failure to build during the crucial period before the peak leaves them at an impasse, trying to construct a welfare state and pay out benefits at the same time. What is unfolding in France, with its mature pension system buckling under aging demographics, illustrates this scenario vividly.

Indonesia could be doomed to repeat France’s pattern unless we begin expanding social security coverage. Reports have revealed that, in its current form, BPJS Ketenagakerjaan is on track to incur financial deficits as early as 2038, a few years before Indonesia’s demographic bonus runs its course. As the current labor force ages, many more claims will be filed for BPJS Ketenagakerjaan payouts while it remains without a sustainable financial base.

The JKM program, for example, is projected to have a claim deficit of over 124 percent and rising by 2029, while JHT—the agency’s most expensive premium, collecting 5.7 percent of a worker’s monthly salary—is facing scrutiny amid an aging workforce.

Although the program’s name of old age security suggests that money would only be paid at old age, the agency allows workers to fully withdraw their JHT in a lump sum upon resignation or layoff. In 2023 alone, more than 1 million workers withdrew funds from their JHT accounts, either partially or completely. The Ministry of Finance projects that 100 million workers will be left with no pension by 2038.

Universitas Gadjah Mada’s labor expert, Qisha Quarina, says that there is currently no “comprehensive secondary data yet measuring whether the disbursement of JHT or other benefits genuinely improves the long-term welfare of their recipients.” As it stands, the JHT program serves more as a short-term severance safety net than a long-term retirement protection.

This is all happening despite the agency also administering separate protections for job loss (JKP) and pension (JP).

Towards a protected labor force

Manpower Minister Yassierli has framed these challenges in terms that gesture at the right diagnosis—that BPJS Ketenegakerjaan must be inclusive and equitable, measured by an increase in membership. But increasing membership alone, without improving enforcement against non-compliant employers, raising mass awareness among informal workers, and revisiting the agency’s fundamental policies, can only go so far.

Vice President Gibran Rakabuming Raka promised 19 million jobs during the 2024 elections campaign. President Prabowo Subianto has, on many occasions, positioned himself as an ally of the country’s labor union and workforce, including by hosting his own May Day rallies at the National Monument last year and this year. But promises of job creation and rally-day handouts cannot be the end of the story.

Are you a part of the protected or unprotected workforce? What do you think about BPJS Ketenagakerjaan - and how can it be made better, in your opinion?

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Indonesia’s digital financial ecosystem is now expanding at unprecedented speed, but regulatory scrutiny has struggled to keep pace with the growing influence of social media personalities who provide investment commentary to millions of followers.

This governance gap was sharply exposed in February 2026, when the Financial Services Authority (OJK) imposed a Rp 5.35 billion fine against Belvin Tannadi, an online financial influencer, for manipulating stock prices and disseminating misleading information through social media platforms.

Investigators found that the influencer used multiple securities accounts to “pump and dump” shares of at least three listed companies, posting promotional recommendations while executing counter-directional trades and profiting from followers’ reactions. The conduct was found to violate Articles 90, 91, and 92 of Law No. 4/2023 on the Development and Strengthening of the Financial Sector (UU P2SK), which prohibit market manipulation and deceptive practices in the capital market. This episode underscores how unchecked social media influence can distort markets and undermine investor protection.

The problem extends beyond isolated misconduct. Across social media platforms, influencers routinely promote cryptocurrency tokens, speculative stocks, and alternative investment schemes, and often frame their content as “financial education” while monetizing engagement through advertising, affiliate links, or undisclosed commercial arrangements.

Retail investors, as many of them are first-time participants in capital markets, may struggle to distinguish between independent analysis and paid persuasion. In volatile markets, such narratives can amplify herd behavior and exacerbate losses. Without clear regulatory classification, enforcement agencies face difficulty determining when online commentary crosses the threshold into regulated advisory activity.

Indonesia’s legal framework for financial advisory services remains anchored in the Capital Markets Law and implementing regulations issued by the OJK. Licensed investment advisors must satisfy competency standards, ethical obligations, and fit-and-proper requirements. These safeguards exist because financial advice directly influences capital allocation and public trust. However, the regime was designed for conventional advisory firms, not a decentralized digital ecosystem where influence is algorithm-driven and monetized through visibility.

The core legal question is thus substantive rather than formal. If a person provides investment recommendations that influence market behavior and receives economic benefit directly or indirectly, should that activity fall within the scope of regulated advisory services?

If regulatory responsibility depends solely on formal titles, then digital actors can operate in a gray zone while licensed professionals bear disproportionate compliance burdens. Such asymmetry undermines fairness and weakens investor protection. The OJK possesses the authority to clarify this boundary through interpretative guidance or regulatory refinement.

Law often trails behind technological innovation and social development, resulting in delayed and fragmented regulation. Proactive measures, such as predictive frameworks and comparative studies, are essential for governing emerging innovations, particularly in the financial sector.

Regulating financial influencers

The OJK has adopted a regulatory sandbox approach, allowing new business models to be tested in isolation from general regulations, helping authorities assess potential risks before full-scale implementation. Under OJK Regulation No. 3/2024, which replaced OJK Regulation No. 13/2018, digital financial business models, processes, and products may undergo limited testing before obtaining full licensing. The challenge lies in striking the right balance between oversight and innovation.

The sandbox framework should extend beyond business models to include influencers or other entities functionally tied to financial innovation. Such an approach is critical to prevent individuals from exploiting regulatory gaps for personal gain at the expense of retail investors. While criminal provisions exist to address violations, preventive and administrative regulations are equally vital, ensuring that punitive measures remain a last resort rather than the primary regulatory response.

Comparative jurisdictions provide useful guidance. In the United Kingdom, the Financial Conduct Authority (FCA) requires authorization for regulated investment advice and has warned that unauthorized financial promotion on social media may constitute criminal offenses.

In the United States, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) enforce registration requirements and fiduciary duties under the Investment Advisers Act. Enforcement increasingly targets unregistered crypto promoters and influencers who fail to disclose paid endorsements. The principle is consistent: the substance of influence determines responsibility.

In China, financial advisors are overseen by the National Administration of Financial Regulation (NAFR) as of 2023, while the China Securities Regulatory Commission (CSRC) continues to supervise securities and futures markets. Regulations require firms and individuals to hold CSRC licenses, a framework that has now been extended to internet-based financial services. Authorities have introduced rules to address risks linked to online platforms, covering cross-border service provision, internet information management, and activities such as client profiling, asset allocation, and trade execution.

Indonesia stands at a regulatory crossroad. Digital participation in the capital market is expanding exponentially, particularly among younger demographics. Which is why the objective is not to criminalize online discussion, but to ensure that those who materially shape investment behavior meet proportionate standards of competence, transparency, and accountability.

A credible reform agenda should therefore begin with definitional clarity. The OJK must articulate when digital financial commentary becomes a regulated advisory activity. Disclosure obligations should apply to monetized investment content. Coordination between financial regulators and digital platforms should be institutionalized to address cross-sector risk. Trust is the foundation of the capital market, and it cannot thrive in regulatory ambiguity.

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In the high-stakes world of Indonesian public policy, a new terrifying precedent is being set. It isn’t about missing billions in classic kickbacks or suitcases of cash. Instead, it’s about something far more abstract: the criminalization of advice.

The prosecution of Ibrahim Arief (Ibam) represents a watershed moment for the Indonesian legal system. By seeking to charge a 15-year prison sentence for a consultant, a penalty far harsher than those sought for the actual government officials involved, the Attorney General’s Office (AGO) has signaled that expertise is now a legal liability.

The myth of the corrupt Chromebook advice

The AGO argues that the Ministry of Education’s decision to procure Chromebooks was “wrong” and fraudulent because many regions lacked internet access. The prosecution partly blamed this on Ibam, who, as a consultant, advised that Chromebooks—along with Windows—could be used and that a device management solution is required to ensure admin control, which effectively makes Chromebooks a more competitive solution.

The prosecution’s narrative hinges on the idea that Ibam “orchestrated” the procurement of Chromebooks by “locking in” technical specifications. This framing conveniently ignores a fundamental structural reality: Ibrahim Arief was a consultant, not a government employee.

He held no executive power. While the prosecution contends that his name appeared in a procurement oversight decree (SK), Ibam’s team argued that this was done without his knowledge. In his role, he had no authority to draft final ministerial policies or to bypass state tender rules. He was brought in to discuss, analyze, and offer a technical perspective. In any functioning bureaucracy, the leap from “expert advice” to “state policy” requires several layers of official review and approval by career bureaucrats and elected leaders.

To hold a consultant criminally liable for a policy he didn’t write fundamentally misunderstands the nature of advisory roles. If a doctor recommends a treatment and the hospital’s management chooses to overspend on the equipment to provide it, you don’t arrest the doctor for “state loss.”

Furthermore, even if Ibam did vouch for Chromebooks only (red: he didn’t), and even if it ends up disastrous, it would still, by itself, not be classified as corruption in its traditional sense. A policy can be ambitious, premature, or even a failure, but under a fair legal system, corruption requires mens rea—actual criminal intent. The prosecution is attempting to redefine “inefficiency” as “corruption.” By this logic, any official who procures technology that eventually becomes obsolete, or isn’t fully utilized due to gaps in external infrastructure, could be labeled a criminal.

The legal trap: Articles 2 and 3 of the Corruption Law

This logical gymnastics is made possible by the current application of Articles 2 and 3 of the Anti-Corruption Law.

• Article 2, section 1 targets anyone who “unlawfully commits an act to enrich themselves, another person, or a corporation that may cause a loss to the state’s finances…”

• Article 3 targets anyone who, with the intention of benefiting themselves or others, “abuses the authority, opportunity, or means available to them because of their position or office…”

The “spirit” of these laws was originally intended to catch sophisticated embezzlers who are good at hiding their tracks. However, the modern interpretation has a major loophole: it doesn’t require the accused to be the one who benefited from the crime.

As long as the prosecution can argue that someone (a vendor, a corporation, or a third party) benefited, and that there was a “state loss,” the person who gave the advice or signed the paper can be held liable. In recent years, this has been weaponized to criminalize people for administrative errors or unpopular policy choices, even when there is zero evidence of a bribe.

We wrote about this previously and discussed it in greater detail.

The chilling effect on Indonesian expertise

The fallout of this case extends far beyond one individual. It sends a clear message to every tech founder, academic, and private-sector expert in Indonesia: Do not help the government.

For years, there has been a push to bring “top talent” into the public sector to help Indonesia leapfrog into the digital age. But why would any sane professional take that risk now? If your technical recommendations can be retroactively branded as “market manipulation,” and if your private assets can be targeted as “fines” for a project you didn’t even control, the rational choice is to stay away.

This creates a “fear of signing” and, worse, a “fear of advising.” We are creating a bureaucracy of “yes-men” in which no one dares to suggest a specific technology for fear it will be interpreted as a “vendor lock-in” by a prosecutor a decade later.

A call for a real anti-corruption drive

We call on the AGO to return to the actual intent of the law. Anti-corruption efforts should be about catching those who actually steal from the public purse or take bribes to influence policy or procurement outcomes, not about second-guessing technical consultations or targeting private citizens to secure a “big win.”

If there was real corruption in the Chromebook procurement—actual bribes, actual mark-ups for personal gain—the AGO should find them and prosecute the individuals who actually walked away with the money. But so far, this case looks like a desperate attempt to manufacture a narrative by targeting a high-profile name.

The alleged increase in Ibam’s wealth between 2020 and 2021 (which coincides with the Chromebook procurement period) has been clarified to be linked to Bukalapak stock, but the prosecution continued to misrepresent unrelated private wealth as illicit enrichment.

Indonesia cannot afford to lose its best minds to a legal system that treats innovation as a crime. The AGO must focus on real theft and stop the dangerous practice of criminalizing the act of giving expert advice.

The Indonesian Rupiah has been on a downward spiral in the past few months as geopolitical tensions continue to strain resources and create global instability. On May 7, it hit an all-time low of Rp 17,445 per US Dollar. Understandably, many of us are worried about an impending crisis, most especially as parallels are drawn with the periods leading up to the 1998 Asian Financial Crisis, when the Rupiah hit its previous all-time low of Rp 16,800 per US Dollar.

It is therefore not an exaggeration to say that everyone was surprised when Statistics Indonesia (BPS) released its latest record of Indonesia’s economic performance in the first quarter (Q1) of 2026, showing a 5.61 percent growth (y-on-y).

How does this make sense?

BPS data clearly indicate that the strong Q1 growth stems mainly from a rise in government expenditure, which grew 21 percent compared to Q1 of 2025. In a departure from the government’s usual habit of spending most of its state budget (APBN) allocation close to the end of the year, this time the government has front-loaded its spending much earlier.

It is quite important to note that economic performance in Q1 of 2025 was unusually weak as the government had just begun its efficiency drive, which then-Finance Minister Sri Mulyani had publicly acknowledged. It’s clearly had an effect in making this year’s Q1 performance look stronger in comparison.

Looking at the sectoral picture also complicates the celebration of the Q1 growth. Accommodation and food services recorded the highest growth at 13.14 percent, which makes sense given the timing of Eid holidays and higher household spending, while mining and quarrying suffered the deepest contraction at -8.20 percent, reflecting a much weaker picture in one of our core productive sectors.

In a nutshell, the growth is, by all means, real. But the story underneath the number is far more complicated than what meets the eye.

What deserves more attention

A 5.61 percent growth rate should, in theory, inspire confidence. When investors look at Indonesia, they’ll see momentum building up, bringing in fresh capital, and eventually the Rupiah will trend upward.

… Right?

Bank Indonesia (BI) has had to intervene heavily in domestic and offshore markets, while also tightening foreign exchange purchase rules to limit speculative demand. In recent weeks, foreign capital has indeed started to return, with BI reporting roughly Rp 57 trillion in foreign portfolio inflows into domestic financial markets by the end of April. But that rebound has not been enough to erase the palpable concerns shared by many.

The picture begins to blur again as we compare Rupiah with its regional peers. The Malaysian Ringgit, Thai Baht, and Singapore Dollar have all held up despite facing more or less similar pressure points. At this point, it’s difficult not to at least assume that there’s something else about Indonesia making investors uneasy.

Fiscal credibility remains the most obvious pain point. Indonesia’s APBN deficit in Q1 of 2026 reached Rp240.1 trillion (0.93 percent of GDP), a steep increase from Rp99.8 trillion (0.41 percent of GDP) in Q1 of 2025. Finance Minister Purbaya has framed this as part of a deliberate front-loading strategy—which may be true—but we’re not sure it’s a strategy that can be replicated and sustained.

Indonesia’s tax-to-GDP ratio also remains among the weakest in the region, falling to 9.31 percent in 2025, while government debt interest payments now consume 22 percent of APBN. With such a thin tax base and concerning budget deficit, it doesn’t help that the government seems to have no serious cost-benefit analysis to weigh the trade-offs it’s prepared to make. On top of that, the government’s Q1 primary balance hit Rp 95.8 trillion, which already surpassed the 2026 threshold of Rp 89.7 trillion.

If these facts don’t worry you, we want your secrets…

Half-hearted course correction

In late April, Deputy Finance Minister Juda Agung announced that the government had decided to discontinue the distribution of the ‘free’ nutritious meal (MBG) program on Saturdays. Saving approximately Rp 1 trillion for each Saturday removed, this decision is part of an effort to “refocus” government spending while continuing to deliver “existing priority programs with greater quality and precision,” according to Juda.

But MBG is far from the only source of concern. Last month, our editorial touched on the Rp 240-trillion gamble that is the Red-and-White Village Cooperative (KDMP) program, revealing that our fiscal risks increasingly fall outside the neat boundaries of the APBN. While the government can certainly argue that KDMP does not directly burden the APBN as its financing flows through state-owned banks (Himbara) and village funds, we doubt that anyone seriously believes the government will simply let Himbara absorb potential losses on its own.

Indonesia’s economy is increasingly steered through an increasingly convoluted network of flagship programs, state-owned banks, sovereign funds, village funds, energy compensation, and politically charged lending schemes. These may be defensible on their own terms, but collectively put the extent of the government’s fiscal accountability to question.

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This is why Purbaya’s public communication mishaps matter more beyond social media memes.

While Sri Mulyani was perceived to be fiscally conservative, Purbaya is seen as more aggressive. Neither is better than the other, but we think it’s not too late to warn that managing APBN requires not only technical capacity, but also wisdom in communicating fiscal policies to the public to keep market confidence at a healthy level. Conversely, Purbaya has not showcased the same discipline. His tendency to shrug off concerns about the APBN deficit and to dismiss expert analyses may come across as attempts to stay calm when the situation calls for serious evaluation.

President Prabowo’s decision to nominate his nephew, Thomas Djiwandono, as BI Deputy Governor back in January seems to have exacerbated these concerns. While the appointment may be defensible procedurally, even the perception that monetary policy is politically exposed might have been enough to unsettle investors.

As a bare minimum, we reckon that a return to common-sense fiscal governance really isn’t too much to ask. It might not be too late yet, but only if the government takes firm action now.

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This article is also available in Indonesian here.

Back in January 2019, I was recruited as a Geospatial Information Systems Analyst at the Coordinating Ministry for Economic Affairs. That was where many stories began, and where the work of trying to matter started in earnest. With a geography degree as my foundation, my superiors challenged my team and me to explore how far Indonesia’s national spatial database could actually be put to use under the One Map Policy framework.

The One Map Policy was, at the time, one of then-president Joko “Jokowi” Widodo’s flagship programs. It brought together 85 thematic maps that could be deployed for a wide range of national purposes. We were given the freedom to think, to dig for ideas, and to ensure that the work ahead would leave a concrete mark on how government functions.

That work eventually led us to one destination: the Indicative Map of Geospatial Information Overlaps, known in Indonesian as PITTI.

PITTI is a geospatial product that flags potential land conflicts arising from overlapping land status designations and business permits. When it was first released in late 2019, it revealed something that had long been suspected but had never been clearly shown: approximately 77.3 million hectares of land across Indonesia were flagged for potential overlaps. The problems fell into four categories:

• Misalignment between spatial plans and forest zone designations;

• Misalignment between provincial and district-level spatial plans;

• Misalignment between business activities and their designated spatial allocations; and

• Direct permit-on-permit overlaps at the same location.

The problems were complex and difficult to parse. But for us, that was exactly the point. A challenge to conquer.

The map that opened a can of worms

PITTI pulled back the curtain on years of tangled land governance and permits in Indonesia. There was significant resistance from within the government itself. Many viewed the transparency as dangerous, the kind of work that stirs up entrenched interests and invites retaliation from land “mafias.” But we kept moving, trying to correct what we quietly called the “geospatial sins” of the past; the administrative failures that had seeded today’s conflicts and were holding back progress.

The consequences of land conflicts are not abstract. They show up in four concrete ways:

• Legal uncertainty over land status that locks up investment and leaves parcels idle;

• Activities operating beyond what the environment can sustain, leading to ecological damage;

• Lost government revenue; and

• The erosion of communities’ rights to the land beneath their feet.

Looking at all of that, we realized information alone would not be enough. A map can show where the problems are, but it cannot fix them. We needed policy.

The much-needed regulation

The drafting of the Omnibus Law on Job Creation, gave us that opening. PITTI was positioned as the empirical foundation for a wholesale reform of land status governance and permits going forward. Overlap became the organizing concept; the problem to be named and solved.

With PITTI as its basis, the Coordinating Ministry for Economic Affairs coordinated all relevant technical ministries to develop resolution policies for each problem category shown on the map. Mandates were distributed according to each ministry’s jurisdiction:

• The Coordinating Ministry for Economic Affairs coordinated all relevant technical ministries to develop resolution policies for each category of problem shown in the map, in line with each ministry’s mandate.

• The Environment and Forestry Ministry (KLHK) was tasked with resolving community rights within forest zones and enforcing geospatially informed compliance.

• The Agrarian Affairs and Spatial Planning Ministry (ATR/BPN) was tasked with harmonizing provincial and district-level spatial plans and auditing oil palm plantation land titles.

• The Energy and Mineral Resources Ministry is responsible for issuing mining permits.

• Other relevant ministries (such as the Industry Ministry and the Investment Coordinating Board) were in support of PITTI’s mission to streamline bureaucratic processes.

This collective commitment eventually produced several government regulations on spatial planning, forestry, and land use (PP 21/2021, PP 23/2021, PP 24/2021, and PP 43/2021) along with a range of ministerial regulations, all governing the resolution of overlapping land status conflicts.

Under the Omnibus Law’s implementing regulations, we, as the lead drafters of the relevant government regulations on overlap resolution, mandated a full restart of all spatial plans at the provincial and district levels.

Provincial spatial plans were revised from scratch to align with forest zone designations. District and city plans then followed, referenced against the revised provincial plans, so that the entire hierarchy of development planning would finally be coherent and forward-looking.

These two initial steps were the structural foundation for improving the quality of spatial planning and guaranteeing legal certainty over the land that underpins permits and investment.

Cleaning up mining and palm oil

Running alongside the spatial plan restart, another front had to be addressed: the extraction and plantation sectors.

In 2021, we initiated preparations for a dedicated PITTI for mining activities in forest zones, which revealed 4.7 million hectares of potential overlap between mining operations and protected forest areas. Working with KLHK and the Energy and Mineral Resources Ministry, we formulated resolution policies that ultimately led to the revocation of more than 2,000 mining permit decrees found to be in breach of existing laws. Between 2021 and 2023, the total area of mining permits within forest zones was reduced by more than 1 million hectares.

In the plantation sector, PITTI revealed that three million hectares of oil palm plantations were sitting on land classified as forest zones. The government responded by formulating a policy to claw back land from corporations (specifically in areas encroaching on conservation forests and protected forests) while mandating reforestation.

Oil palm land within production forests was redirected to state-owned plantation enterprises. One of the most widely discussed recent developments is the reclamation of oil palm plantation land within Tesso Nilo National Park, which is now being restored as a conservation forest.

Taken together, the enforcement actions in the mining and oil palm sectors represent a significant leap in Indonesia’s permitting reform, not only in terms of recovering lost state revenue, but in advancing meaningful environmental restoration.

The inevitable disruption

The Omnibus Law and its implementing regulations sent shockwaves through the business world. Corporations that had spent years profiting from the gray zones of Indonesian permitting, costing the state billions, sometimes trillions of rupiah, suddenly found themselves facing the prospect of sanctions, higher levies, and criminal liability. The anxiety was real, and in many cases, warranted.

At the same time, the bar for new investment and permits was raised considerably. Any new application now had to account for forest zone designations, spatial allocations, and all previously issued permits. This was not bureaucratic caution for its own sake. It was a deliberate effort to ensure that the overlap cases of the past — the ones that fueled social conflict, ecological damage, and investment uncertainty — would not simply be replicated under a new set of names.

Nearly 20 million hectares cleared of issues

The efforts were not in vain. Over five years — from 2019 to 2024 — the total area of flagged overlaps was reduced from 77.3 million hectares to 57.4 million hectares. Nearly 20 million hectares were cleared from a backlog of governance failures accumulated over decades. For a government that had long been accused of ignoring the problem, this was a genuine reckoning.

But five years, as it turns out, is not enough. And there is far more to go.

The end of 2024 marked the close of our chapter. Government restructuring moved the task force we had been running to the newly formed Coordinating Ministry for Infrastructure and Regional Development. The work has found a new home. What happens next is not ours to steer.

This is still only the beginning. What we can hope for is that the task force and the mission of resolving land overlap and permitting conflicts continue to build on what the five years between 2019 and 2024 made possible. Not as an ending, but as a foundation.

Read winning articles from our first Writing Competition on our site: thereformist.id. The Bahasa Indonesia series can be found in the “Insiders” section. New article every week!

Pada Januari 2019, saya direkrut sebagai Analis Sistem Informasi Geospasial di Kementerian Koordinator Bidang Perekonomian. Dari situlah bermula banyak cerita dan upaya untuk terus berdampak. Dengan latar belakang studi geografi yang saya miliki, pimpinan menuntut saya dan tim untuk mengeksplorasi sejauh mana daya manfaat basis data spasial nasional dalam kerangka “Kebijakan Satu Peta.”

Kebijakan Satu Peta, kala itu merupakan program super prioritas Presiden Jokowi, berhasil mengintegrasikan 85 peta tematik yang bisa dimanfaatkan untuk berbagai kepentingan nasional. Saat itu, kami diberikan keleluasaan untuk berpikir dan menggali ide agar kerja-kerja yang kami lakukan ke depan dapat berdampak konkret bagi birokrasi pemerintah.

Peta Indikatif Tumpang Tindih Informasi Geospasial (PITTI) menjadi output yang akhirnya kami tuju.

PITTI merupakan informasi geospasial yang menunjukkan indikasi konflik lahan akibat tumpang tindih status lahan dan izin-izin usaha. Pertama kali dirilis pada akhir 2019, PITTI mengungkap bahwa ada sekitar 77,3 juta hektare lahan di Indonesia yang terindikasi tumpang tindih. Ada empat jenis kasus:

1. ketidakselarasan tata ruang dengan kawasan hutan;

2. ketidakselarasan tata ruang level provinsi dan kabupaten/kota;

3. ketidakselarasan kegiatan usaha dengan peruntukan tata ruang; dan

4. overlap antarizinan pada lokasi yang sama.

Kasus-kasus ini kompleks dan sulit dimengerti. Tapi bagi kami, ini tantangan.

PITTI yang membuka tabir

PITTI membuka tabir karut-marutnya tata kelola lahan dan perizinan yang selama ini terjadi di Indonesia. Banyak pihak di internal pemerintah yang menentang keterbukaan informasi tersebut, menganggapnya sebagai pekerjaan kotor yang rentan terhadap perlawanan “mafia.” Namun, kami terus bergerak, memperbaiki “dosa-dosa geospasial” masa lalu yang menyebabkan konflik dan menghambat kemajuan hingga hari ini.

Bicara soal konflik lahan, setidaknya ada empat hal yang terdampak:

• ketidakpastian hukum atas suatu lahan yang mengakibatkan investasi terhambat dan lahan menjadi terlantar;

• kegiatan yang tidak sesuai dengan kapasitas lingkungan sehingga memicu kerusakan ekologi;

• hilangnya pendapatan negara; serta

• hak masyarakat yang tidak terjamin.

Memandang semua itu, kami sadar bahwa kami membutuhkan lebih dari sekadar informasi berupa PITTI: kami butuh kebijakan penyelesaian konflik lahan.

Dari peta ke kebijakan

Momentum penyusunan Undang-Undang Cipta Kerja (UUCK) menjadi tonggak penting dalam pergerakan kami saat itu. PITTI ditempatkan sebagai dasar revolusi tata kelola status lahan dan perizinan ke depan. Masalah tumpang tindih menjadi kata kunci yang didorong dalam penyusunan UUCK dan regulasi turunannya. Berbekalkan informasi yang didapat dari PITTI, bagi tugas masing-masing kementerian pun terbentuk:

• Kementerian Koordinator Bidang Perekonomian: mengoordinasikan seluruh kementerian teknis terkait untuk menyusun kebijakan penyelesaian atas masalah-masalah yang terpampang dalam peta tersebut, sesuai dengan tugas dan fungsi masing-masing.

• Kementerian Lingkungan Hidup dan Kehutanan (KLHK): menyelesaikan hak masyarakat dalam kawasan hutan sekaligus menertibkan pelanggaran di sektor kehutanan berbasis informasi geospasial.

• Kementerian Agraria dan Tata Ruang (ATR/BPN): menyelaraskan tata ruang level provinsi dan kabupaten/kota, serta menertibkan Hak Guna Usaha (HGU) perkebunan kelapa sawit.

• Kementerian Energi dan Sumber Daya Mineral (ESDM): menertibkan Izin Usaha Pertambangan (IUP) Minerba.

• Kementerian teknis lainnya (Kementerian Perindustrian, Badan Koordinasi Penanaman Modal, dan lain sebagainya) turut mendukung birokrasi percepatan penyelesaian problem lahan dalam investasi.

Kepedulian seluruh kementerian dan lembaga terhadap masalah tumpang tindih dalam PITTI akhirnya melahirkan kebijakan berupa beberapa peraturan pemerintah tentang tata ruang, kehutanan, dan penggunaan lahan (PP 21/2021, PP 23/2021, PP 24/2021, PP 43/2021) beserta banyak peraturan menteri terkait yang mengatur penyelesaian konflik status lahan dimaksud.

Melalui regulasi turunan UUCK, kami selaku pemrakarsa PP tentang penyelesaian tumpang tindih pun mengamanatkan aksi restart pada seluruh rencana tata ruang di level provinsi dan kabupaten/kota.

Tata ruang provinsi direvisi agar seluruhnya mengacu pada zona-zona kawasan hutan. Setelah itu, dilanjutkan dengan revisi tata ruang level kabupaten/kota yang mengacu pada tata ruang provinsi yang telah direvisi, agar hierarki rencana pembangunan saling selaras ke depannya.

Dua langkah awal ini menjadi bagian dari kerangka untuk meningkatkan kualitas tata ruang dan menjamin kepastian hukum atas lahan yang dijadikan alas perizinan dan investasi.

Menertibkan tambang dan sawit

Paralel dengan proses restart tata ruang, penertiban sektor tambang dan perkebunan menjadi hal strategis yang harus dibereskan. Pada 2021, kami menginisiasi penyusunan PITTI Pertambangan dalam Kawasan Hutan, sebuah peta yang menunjukkan adanya 4,7 juta hektare indikasi tumpang tindih usaha tambang dalam kawasan hutan.

Bersama KLHK dan Kementerian Energi dan Sumber Daya Mineral (ESDM), kami merumuskan kebijakan-kebijakan penyelesaian hingga berhasil mencabut lebih dari 2.000 SK Izin Usaha Pertambangan (IUP) yang dianggap melanggar ketentuan perundang-undangan. Antara 2021 dan 2023, luas permasalahan izin tambang dalam kawasan hutan berhasil ditekan hingga lebih dari satu juta hektare.

Di sektor perkebunan, PITTI menunjukkan adanya tiga juta hektare perkebunan kelapa sawit yang berada di lahan berstatus kawasan hutan.

Pemerintah kemudian memformulasikan kebijakan penyerahan kembali lahan dari korporasi kepada negara, khusus untuk lahan perkebunan yang merambah Hutan Konservasi dan Hutan Lindung, sekaligus mengamanatkan reforestasi atau penghutanan kembali.

Adapun lahan kelapa sawit yang berada di Hutan Produksi diarahkan pengelolaannya kepada BUMN sektor perkebunan.

Salah satu langkah yang paling hangat diperbincangkan belakangan ini adalah penarikan kembali lahan perkebunan sawit di Taman Nasional Tesso Nilo, yang selanjutnya akan dipulihkan menjadi kawasan hutan konservasi.

Kebijakan dan aksi penertiban di sektor pertambangan dan perkebunan kelapa sawit ini merupakan lompatan besar dalam revolusi perizinan. Bukan hanya untuk mengoptimalkan pendapatan negara, tetapi juga untuk mendorong upaya-upaya restorasi lingkungan yang signifikan.

Gejolak yang tak terhindarkan

Lahirnya UUCK dan regulasi turunan terkait revolusi status lahan dan perizinan memicu berbagai gejolak dalam dunia usaha. Keresahan akan pengenaan sanksi, kenaikan tarif, hingga ancaman pidana menghantui pihak-pihak korporasi yang selama bertahun-tahun “mencuri” keuntungan, merugikan negara hingga miliaran bahkan triliunan rupiah.

Di sisi lain, proses investasi dan pemberian izin kini harus memperhatikan kawasan hutan, peruntukan ruang, serta izin-izin lain yang sudah terbit sebelumnya. Kondisi ini membuat proses perizinan dan penanaman modal semakin ketat dan tidak bisa dilakukan sembarangan, semata-mata agar tidak lagi dijumpai kasus-kasus tumpang tindih yang memicu masalah sosial, kerusakan lingkungan, dan ketidakpastian investasi yang menghambat pertumbuhan ekonomi di daerah.

Menyelesaikan hampir 20 juta hektar lahan bermasalah

Berbagai upaya, strategi, dan kebijakan dalam rangka menekan permasalahan tumpang tindih status lahan dan perizinan di atas tidaklah sia-sia. Dalam kurun waktu lima tahun, dari 2019 hingga 2024, kami berhasil menekan angka luas permasalahan dari 77,3 juta hektare menjadi 57,4 juta hektare. Penurunan hampir 20 juta hektare ini merupakan hal besar bagi pemerintah; sebuah “bersih-bersih” birokrasi perizinan yang nyata.

Tentu, untuk menyelesaikan semuanya dibutuhkan proses yang jauh lebih panjang, dan lima tahun tidaklah cukup. Akhir 2024 menjadi titik finish perjalanan kami karena adanya reorganisasi yang memindahkan kewenangan kami ke Kementerian Koordinator Bidang Infrastruktur dan Pembangunan Kewilayahan.

Ini masih awal. Semoga satuan tugas penyelesaian tumpang tindih status lahan dan perizinan di tempat lain terus melahirkan gerakan revolusioner lanjutan, melanjutkan apa yang kami jalankan selama lima tahun sebelumnya.

The strains around the Strait of Hormuz once again highlight how fragile global energy systems can be. For Indonesia, the risk is notably critical because the country consumes around 1.6 million barrels of oil per day, while domestic production has declined to only around 600 thousand barrels per day. The nearly 1 million barrels-per-day gap must then be met through imports. Instability in strategic chokepoints like the Hormuz is thus a direct threat to our energy security, not merely a distant geopolitical disruption, given our exposure to global supply routes.

It is tempting to conclude that Indonesia is facing an energy crisis. But is it really?

​Traditionally, an energy crisis is associated with visible disruptions: blackouts, fuel shortages, or soaring prices. Indonesia has experienced some of these pressures, including rising energy subsidies, vulnerability to the fluctuations of global oil prices, and increasing dependence on imported fuel, though not yet at the level of systemic collapse seen in some countries.

Today, Indonesia is facing a more subtle and structural challenge than simply a supply crisis: a mismatch between the country’s energy consumption trends, resource base, and long-term system readiness.

Indonesia’s energy challenge is paradoxical: We hold vast coal reserves (the world’s 3rd-largest coal producer) and are among the countries with the largest renewable energy potential (estimated at more than 3,600 GW, including solar and geothermal). However, we are still heavily dependent on imported oil to sustain daily economic activity.

All of this boils down to the conclusion that Indonesia’s energy problem lies in how our energy system is managed: which resources are given priority, which infrastructure is built, and which consumption patterns persist.

Structural paradoxes

Currently, Indonesia’s energy system has three structural contradictions:

First, more than 80 percent of our energy mix still relies on fossil fuels, with coal accounting for the majority of electricity generation.

Second, we import nearly 1 million barrels of oil per day, despite being resource-rich, exposing the country to global price volatility and geopolitical risk.

Last, but not least, while the country possesses immense renewable potential, less than 1 percent has been effectively harnessed.

These dynamics do not exist in isolation. They reinforce one another, forming a system that is stable in the short term but vulnerable in the long term.

Further, public discourse on energy challenges is frequently framed as a supply issue. Build more power plants, deploy more renewables, reduce imports. But this is an oversimplification of a fundamentally systemic problem.

Take solar energy as an example. President Prabowo Subianto’s ambition to develop 100 GW of solar capacity is a bold step. However, solar power is inherently intermittent, so the conversation should continue to explore how we will provide adequate grid flexibility, storage systems, and operational preparedness.

Adding new capacity alone could destabilize the very system it aims to improve. Thus, we need to focus on redesigning the system and its management when discussing the energy transition.

System readiness is a missing piece

The question is: Are our energy systems ready?

On the supply side, the bottleneck in our system readiness goes past infrastructure alone. Several challenges endure:

• Our power grid is still largely designed for baseload generation.

• Energy storage infrastructure is limited.

• Regulatory and investment frameworks are evolving, but not yet fully aligned.

• Human capital for managing a more sophisticated energy system is still developing.

However, our system readiness is also reflected in how we consume our energy.

Now, let’s talk about the demand side

In Indonesia, conversations on energy transition remain heavily supply-driven. While they are absolutely essential, they overlook a simpler yet powerful lever: energy conservation at the demand level.

Small behavioral changes can have a significant impact collectively. Something as simple as turning off unnecessary lights, setting air conditioners at efficient temperatures (24–26°C), and adopting more conscious energy use could change the way we think about energy transition, beyond the governmental agenda.

The transport paradox and rethinking the real solution

To illustrate, let’s now examine Indonesia’s transport sector, one of the largest consumers of fossil fuels.

The government has taken important steps to endorse electric vehicles (EVs) and reduce emissions. However, this raises a critical question: Does reducing emissions automatically solve our energy challenges?

In cities like Jakarta, it’s not that simple. While EV adoption may reduce emissions, it does not address the underlying issue that has long afflicted the metropolitan: vehicle overpopulation.

Policies that provide privileges to EV users, such as tax breaks and exemptions from traffic restrictions, may unintentionally favor those who can afford to buy more private vehicles. Meanwhile, structural problems remain unresolved.

If the goal is to meaningfully reduce both emissions and energy consumption, switching technologies (from coal to solar, from fossil fuels to EVs) alone is not enough.

For example, investing in accessible public transport offers a more systemic solution. Unlike private vehicle electrification, it reduces both per-capita energy demand and vehicle volume simultaneously.

Towards a complete transition

Ultimately, Indonesia should aim to transition to cleaner, more sustainable, and more resilient sources on one end and change how energy is consumed across society on the other. Otherwise, the transition risks becoming incomplete.

Reframing Indonesia’s energy challenge as a management issue leads to a different set of priorities.

In the short term, the country should improve energy security by reducing vulnerability, managing demand, and decreasing dependence on imported fuels.

• In the medium term, the focus needs to shift to infrastructure: modernizing the grid, scaling storage, and aligning regulatory regimes.

• In the long term, the goal should be transformation, in which renewable energy is not merely added but fully integrated into a resilient and adaptive system.

The question, then, is not whether Indonesia has enough energy. It is whether Indonesia is ready to manage the energy system of the future. Because the real challenge is not a lack of solutions, but the ability to implement them coherently, consistently, and at scale.

Want to share your views on public policy reforms or other political issues?

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This article is also available in Indonesian here.

“Perfection belongs only to God,” many people say. But at the Finance Ministry, perfection is one of the values we apply, translated into the principle of “continuous improvement.”

At the Echelon I level in Directorate General D, there is a foundational mindset instilled in employees: initiative, meaning the ability to solve problems and offer solutions without waiting for orders, and a corrective attitude, meaning the willingness to fix mistakes for the sake of meaningful change. It sounds like a cliché, but this is precisely what I have been trying to apply in my own unit, particularly when it comes to harnessing a new technology, let’s call it Technology U, to support one of our core duties.

In my unit, Directorate P, there is a running joke that the staff here are “illiterate,” in the sense that they work based on the experience passed down from senior to junior rather than by reading the regulations. And they are equally reluctant to commit that experience to writing. In recent years, this old habit has begun to be challenged, and I can say with some pride that I have been one of the people pushing against it.

Two dimensions of implementing technology challenges

When it comes to implementing new technology, of course, you cannot separate the political dimension, namely leadership support, from the technical dimension, such as procurement. On the matter of leadership support, many organizations adopt new things simply because a senior figure has decreed it, rather than as the result of careful study and data analysis. As for technical matters like procurement, collusion between unscrupulous officials and vendors often unfolds so smoothly that it begins to look like the natural state of affairs. The question is, how long can this go on?

Looking back a decade ago, I began writing about the use of Technology U while I was still on a study assignment. From class discussion papers and semester exam essays, it culminated in a thesis that now sits neatly on a shelf in the library of the official academy where I was studying.

When I returned to the office, I was given a mandate in a new unit, Directorate P, with the mission of bringing this idea to life, which turned out to align with the organization’s transformation blueprint. It was a major task, and I had no idea just how difficult it would prove to be.

Four years of sluggish progress

As I mentioned earlier, the political dimension looms large in the adoption of anything new, and my organization is no exception. Even though a study team had been formed and data were being collected continuously, when leadership simply ignored the work, even the best ideas only piled up in some forgotten corner of the organization.

From 2019 to 2023, for nearly four years, we crawled along at the pace of a garden snail. Until one moment changed everything: pressure from another unit within our ministry pricked the ego of our leadership. The Director, who had previously been indifferent, transformed overnight into a full supporter of the idea and demanded that we begin pilot implementation within a month. Even though we had to rush to finish the study, we eventually secured the Minister’s support as well.

The procurement battlefield

With the political side in hand, the technical challenges were already waiting for us.

Procurement in our unit, as it turned out, was not free from the grip of certain individuals who controlled vendor selection from behind the curtain. Among the dozen or so companies offering Technology U, we had to choose between vendors carrying foreign-brand products that were technically capable but threatened to blow our budget, or local pioneer companies whose prices were reasonable but whose specifications were riddled with limitations.

Fortunately, two local manufacturing companies offered a solution. They proposed using free-market components from abroad and assembling them according to our needs. We invited them to get creative, and then looked for the option that fit our budget. To make a long story short, one of the vendors, let’s call them PT Bravo, offered a package that met our requirements at a more competitive price than PT Foxtrot. At last, we had a sensible option for implementing Technology U in our unit. Logically, all PT Bravo had to do was submit their offer through the government-regulated e-catalog, and the decision maker within the ministry would select them.

The art of marking up price

Did things pan out as smoothly as my description? Of course not.

Life threw in a major plot twist near the end of the process with the sudden appearance of PT Alpha, which offered a product that was eighty percent identical to PT Bravo’s, at almost the same price. Only a few components distinguished the two offers. Even the brochure they posted on the e-catalog system was literally a copy of PT Bravo’s, with the logo cropped out and replaced by their own, along with their chosen components.

The absurd part is that PT Alpha had once submitted a proposal for Technology U at twice their current price, with one of the core components only slightly different. In their first proposal, the system they offered carried a component from a brand priced at Rp 1.9 billion. This time around, the difference was that they used an alternative component, the same brand PT Bravo was using, at only Rp 900 million.

Every other component was identical. In reality, when I checked the international market, both these components were priced in roughly the same range. Even more absurdly, when PT Alpha presented their offer to us, they pitched a completely different product, let’s call it Brand S from yet another country, priced at around Rp 5 billion.

Apparently, PT Alpha had a strong streak of mark-up running through their veins.

It sounds insane, but that was the reality. What made it more insane was that PT Alpha had often won tenders in our unit before, under various corporate identities all controlled by a single nuclear family. The father, the mother, and their two children each had their own company, and together they supplied a wide range of our unit’s needs.

You could say their character was that of a one-stop shop selling whatever the user happened to ask for. Worse still, several of my colleagues had dealt with goods procured from this strange constellation of entities, and every one of them rated the performance negatively: incomplete products, unqualified technicians, half-finished installations, even signs of contractual neglect. Yet remarkably, in administrative records, they were spotless. We were dealing with big-league players who had built a symbiotic relationship with corrupt insiders within our own organization.

A senior staff’s Hail Mary

Refusing to give up, my team and I, all of us in agreement that this rotten game had to end, set about comparing every component of the products offered by the two companies. The strangeness kept happening because every time we compared the solutions from PT Alpha and PT Bravo and identified weaknesses in PT Alpha’s components, their representatives would soon inform us that they had updated their proposal “with newer, more advanced components, at the same price.” After this happened three times, we became increasingly convinced that there was indeed a kind of “score-fixing” at work in this procurement.

Still undeterred, one of our seniors, who was fed up with these unhealthy procurement practices, handed us our ultimate weapon: the Presidential Regulation No.12/2021 on procurement. The regulation states explicitly that, beyond meeting the user’s needs, vendors must be prioritized based on their strengths in research, support for the creative economy, contribution to Micro, Small, and Medium Enterprises (MSMEs), and the product’s level of Domestic Component Content, known locally as TKDN.

Armed with this ammunition, the balance of the technical team’s discussion shifted in a way that could no longer be denied. Twelve members of the technical team could not reach a consensus until finally the team chair decided to put it to a vote.

Given the full set of facts laid out before us, it was clear that PT Bravo was decisively superior to PT Alpha, even without bringing up the potential for corruption, collusion, and nepotism, the negative track record, or the long list of other shortcomings on PT Alpha’s side. It came down simply to their inability to meet the criteria spelled out in the Presidential Regulation. The vote reflected exactly that. PT Bravo won decisively, nine votes to three.

A long way to go

Did the drama end there? Of course not. PT Bravo still had to prove that its product could live up to expectations. Our staff, the user team that had been trained, had to be ready to demonstrate their capability. Internal regulations on the use of this technology, the sustainability of its operations, and a long list of other unfinished homework were all still waiting for us.

But for now, we have offered some proof that the implementation of new technology and procurement grounded in data can still happen, even amid the stigma that adoption depends on political backing and that government procurement is often clouded by corruption, collusion, and nepotism.

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