Last year, Jakarta topped the list of the world’s most populous cities, according to the United Nations (UN), with a population of 42 million residents, beating major metropolises like Tokyo, Shanghai, and New Delhi.

But this number includes people living in satellite cities surrounding the capital. In reality, only 12 million actually reside in the administrative region of Jakarta, and the rest are commuters who enter and exit the metropolitan area daily to work. They are victims of urban sprawl, driven out of Jakarta by the rising cost of housing.

Kompas estimates the average rent in Jakarta (Rp 3.976 million) rounds up to 75 percent of the average salary (Rp 5.25 million) a worker makes in the city. For the same salaryman to then purchase a home, they would need to save 13 years’ worth of their salary without spending a single dime, according to 2025 statistics.

This reality is compounded by Statistics Indonesia’s (BPS) 2022 survey, showing that only 36.69 percent of all Jakarta households have access to adequate housing. A more recent BPS survey conducted in 2025 has even revealed that the city currently lacks over 1.39 million housing units for its citizens.

What if we told you that the city is actually not dense enough, and that there are still many policy mechanisms the provincial government can do to make Jakarta more affordable and hospitable for each one of its citizens?

In this edition of The Reformist, we go hyperlocal to cover Jakarta’s housing crisis. We investigate the outdated zoning regulations that have largely disincentivized the construction of vertical housing units, the regressive tax regime that benefits rich landowners with multiple plots of land, and how political will, or lack thereof, has prevented any sustainable housing solutions from succeeding.

Jakarta is not dense enough

In reality, the city is far less dense than it should be. Most of Jakarta’s residential land is legally barred from creating buildings over four storeys. Here is why.

Across Jakarta, housing projects must comply with the city’s Floor Area Ratio (KLB) regulation. The KLB limits the total floor area a building can have on a given plot of land, which effectively controls building height and intensity.

A 100-square-meter plot of land with a KLB of 2, for example, could have a total building capacity of 200 square meters. These 200 square meters can be distributed horizontally or vertically by dividing the building into four floors, for example, with each floor being 50 square meters large.

The higher the KLB, the more housing units can be built under a single plot of land. KLBs vary by district depending on multiple factors like land use classifications and geographical location. Areas in close proximity to public transport are given higher KLBs due to their perceived economic benefits, while residential plots are designated lower KLBs to control density and maintain neighborhood character.

The Jakarta provincial government administers these zoning regulations under a two-tiered hierarchical system. First, the overarching spatial master plan is governed by the Regional Spatial Plan (RTRW), which designates broad land-use classifications such as residential, commercial, and non-residential zones.

Second, this is then regulated at the micro level under a Detailed Spatial Plan (RDTR), which specifies the zoning of individual streets, sets height limits for buildings, determines green space to building ratios, and establishes other detailed provisions governing Jakarta’s urban landscape.

Jakarta’s RTRW is currently governed under Regional Regulation No.7/2024, whereas the RDTR was released in 2022 through Gubernatorial Regulation No.31/2022.

Under the 2022 RDTR, residential plots in Jakarta’s Very High Density Residential zone (classified as R-1) face surprisingly low ceilings, despite the name. A plot between 240 and 400 square meters in this zone is capped at a KLB of 2 with a maximum height of four floors. For plots greater than 400 square meters, the ceiling drops further to KLB 1.6 with the same four-floor cap.

According to Elisa Sutanudjaja, executive director of the Rujak Center for Urban Studies, 89.37 percent of residential-designated land in Jakarta carries a KLB below 2 in 2022. In practice, this means most of the city’s residential blocks are restricted to single-family home units that are no more than three floors on any given plot.

That said, Jakarta’s zoning regulations do contain some progressive intensification schemes. Plots of land within 1.2 kilometers of Jakarta’s major public transportation lines (Commuter train, MRT, and Bus) are given a KLB between 7 and 11 if they are repurposed for vertical housing units. This provision, however, is limited to vertical housing units, which are an entirely separate zone classification from residential plots that dominate Jakarta’s total landscape.

According to another study by University of Indonesia scholars that examines the impacts of zoning regulations on Jakarta’s property prices, raising the KLB for residential plots by just one unit can decrease housing prices in the city by 10 percent. This would provide more accessible prices for the average Jakartan.

Hong Kong, for example, is just as dense as Jakarta—if not more—but its KLB levels can reach around 8 to 10 for residential buildings. In Jakarta, the same intensity is reserved for narrow patches of land hugging the city’s main public transport lines. The rest of the capital is zoned for two to four-story development that favors the creation of single-family housing units.

Overly stringent zoning regulations in residential plots have made affordable housing nearly impossible to deliver at scale in the city.

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Is regressive land value tax to blame? Only the rich benefit from it

Apart from the need to reform zoning regulations, Jakarta remains too lax on rich landowners. At present, affluent citizens with multiple plots of land throughout the city are able to hold onto their assets without any significant economic pressure.

Jakarta’s land value tax (PBB-P2) regime remains regressive, incentivizing these landowners to hold onto their assets as the appreciation in land value offsets the losses from taxes. The PBB-P2 tax rate is currently set at a flat 0.5 percent for all land categories, regardless of whether the land is productive or idle, as regulated by Jakarta’s Regional Regulation No. 1/2024.

Compare this with Jakarta’s vehicle ownership tax (PKB). Under the same 2024 regulation, the minimum PKB rate is not only larger than the PBB-P2 but also progressive, increasing with each additional vehicle a person owns. Owning one car costs you two percent, two at three percent, three at four percent, climbing all the way to six percent for owning five or more vehicles. Before the 2024 tax regulation, owning 17 or more vehicles would’ve triggered a 10 percent PKB tax rate, so perhaps even this tax regime has become less progressive over time.

However, there have been past efforts to introduce schemes resembling a progressive PBB-P2. In 2019, then-governor Anies Baswedan increased the PBB-P2 by 200 percent for idle land to incentivize the creation of new open green spaces in Jakarta’s main arterial roads, namely Sudirman, Thamrin, Rasuna Said, Gatot Subroto, and MT Haryono. Landowners who opted to convert their land to open green spaces would then be given a 50 percent tax break for that financial year. It was either let your land sit and pay double, or turn it into a park and pay half the taxes.

These regulations, however, failed to systemically change how the city’s landowners manage their idle assets, as they only targeted a small segment of the city and lasted for only a year. Now, every Jakarta citizen is subject to the flat 0.5 percent rate.

Let’s paint a real-life example of Jakarta’s current PBB-P2 tax regime. A 576 square meter plot of vacant land is currently on the market in Menteng, Central Jakarta, described in the listing as situated in a “strategic and commercial location.” The asking price is Rp 21 billion. The plot sits in the middle of one of Jakarta’s oldest neighborhoods, an area close to every public transport option Jakarta has to offer.

After running the numbers, the owner of this Menteng kavling would pay Rp 56.82 million in PBB-P2 taxes, which sounds substantial until you compare it to what the land is actually worth.

With a Rp 21 billion asset, the effective annual tax rate boils down to only 0.27 percent of market value. Meanwhile, land prices in Menteng continue to climb at astronomical rates year after year. While the landowner has chosen to put their asset on the market today, they have already accumulated wealth far beyond what the PBB-P2 levy can do to hurt their pockets.

Real estate math aside, the 0.27 percent figure highlights the city’s regressive tax regime. Without a more progressive tax regime that directly incentivizes the construction of new residential units, Jakarta’s housing crisis will continue as supply remains constrained.

The regressive tax regime also extends to a large amount of old, unused, or idle plots of land owned by government entities like state-owned corporations, ministries, and even law enforcement bodies that spread throughout the city. These types of idle land are subject to even looser tax regulations, or even worse, exempted from them entirely.

On top of that, the recent influx of padel courts in the city can also be attributed to this regressive tax regime. With landowners having no reason to sell their idle land or use it to build residential units, they can simply wait for the next viable business venture. Padel courts today happen to be the most lucrative economic opportunity for landowners without any significant costs.

One abandoned program after the other

Moving away from rigid city policy, any reform effort to tackle this issue will never succeed without institutional continuity that outlasts any individual governor. Promises to address Jakarta’s housing are not novel. Every governor who has worked at city hall has pledged, in one form or another, to solve the housing crisis.

Before ascending to the presidency, then-Jakarta governor Joko “Jokowi” Widodo championed vertical housing as his solution to the city’s housing crisis. When his deputy, Basuki “Ahok” Tjahaja Purnama, took over in 2014, he continued these housing projects but drew fierce backlash for his “inhumane” relocation programs, which forcefully cleared “illegal” neighborhoods.

Under former governor Anies Baswedan, the administration oversaw the creation of dozens of vertical housing units on top of his flagship “zero down payment” housing project. He initially planned to construct over 200 thousand units, but by the end of his term in 2022, that number had gone down to only 9 thousand. Since then, subsequent administrations have effectively sidelined the program with no signs of rebooting it.

Perhaps with current Governor Pramono Anung, who has publicly stated that he would continue any good policy that his predecessors had come up with in the past, regardless of partisan lines, things might be different. The technical solutions, in theory, already exist. Every piece of this puzzle has been debated, drafted, piloted, and abandoned. The question for Pramono, and whoever succeeds him in the future, is whether Jakarta can finally build a housing institution that outlasts the governor who promised it.

Towards a more affordable Jakarta

Although Jakarta’s land area spans just 664 square kilometers, it commands a fiscal capacity unmatched by any other regional administration in the country at Rp 81.32 trillion. Yet despite the city’s vast resources, the city’s housing affordability crisis has only deepened, with land prices climbing faster than wages and homeownership slipping further out of reach for the average Jakartan.

Now, it is up to the provincial government to use the policy mechanisms at its disposal to make affordable housing more viable in the city. Just a few days ago, Governor Pramono pledged to cover tuition costs at 103 private schools. The same political will to improve the city’s education should also be directed toward reforming Jakarta’s housing policy. By doing so, the city can finally make steps to mitigate the plaguing urban sprawl phenomenon and begin housing Jakarta’s 12 million residents, or even the “42 million” figure the UN reported.

Governor Pramono and the Jakarta government must revisit the city’s existing KLB policy to allow taller residential buildings alongside a more progressive land tax regime that benefits the majority of Jakartans rather than just the affluent, reduce housing costs, and create a denser, more affordable city.

For those of you living in Jakarta or facing similar housing and livability challenges in your city, what housing reforms could help your city’s current situation?

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Last year, President Prabowo Subianto returned home from his visit to the Netherlands with a repatriation agreement. The Dutch government was to return about 30,000 artifacts that had been taken by the Dutch during their occupation of Indonesia.

This was great news—right?

Well, not according to the netizens. When the news broke, instead of high praise, the agreement was met with hefty skepticism on social media, with statements like “the artifacts will be safer in the Netherlands” and “can we even take care of them…?”

Some others went as far as expressing concerns that the artifacts will end up lost, decayed, destroyed, or stolen—be it in a museum fire, collection theft, or pure neglect—if they are returned to Indonesia.

These reservations are not unfounded. In 2020, a government report revealed that only 8 percent of Indonesia’s 439 museums are well-managed or “type A,” according to the government’s own museum management standards. Several museums—including the National Museum, Maritime Museum, and Clay Museum—have caught fire in the past decade, destroying invaluable collections. Museum lootings are also relatively common, as some museums have no security guards, some lack CCTVs, and many cases remain unsolved. The National Museum in Jakarta has been robbed five times throughout its history, most recently in 2013.

But the state of our museums and the lack of trust Indonesians have in their government to take good care of our treasured artifacts may have unearthed more pressing issues to discuss: Why haven’t we made culture and heritage preservation a priority? What reforms have been made since our independence to make sure we are getting better at caring for the items that carry our collective memories?

In this edition of The Reformist, we look into the evolution of Indonesia’s cultural and heritage sector from the colonial period to the present: through the regulations that were passed, the institutions that were built, the diplomatic struggles to reclaim what was taken, and the reforms that have only recently begun to test whether the country can do better.

Decades of colonial-style preservation

Before Indonesia gained its independence in 1945, the field of cultural heritage preservation existed under the colonial Dutch East Indies administration. The Dutch understood that the land they were occupying had centuries’ worth of history to preserve, though their approach was fundamentally orientalist.

The Batavian Society of Arts and Sciences, founded in 1778, was created by the Dutch East India Company (VOC) officials to study the cultural and scientific aspects of the archipelago. They conducted ethnographic and archaeological research, accumulating collections of objects of significant cultural and prehistoric importance to the archipelago. The society sat where the National Museum exists today in Central Jakarta.

Furthermore, the Dutch focused on restoring monuments to their former condition, preventing the removal of artifacts. It was under the Dutch that the Prambanan and Borobudur temples began to be restored in the 1910s. Their preservation principles were codified in 1931 through Monumenten Ordonnantie (MO) regulation, with cultural objects divided into three categories: (1) man-made objects of great importance for prehistory, history, or art; (2) palaeoanthropology objects; and (3) historical sites.

It was only six decades later that the colonial regulation was changed through the passage of Law No. 5/1992 on Cultural Heritage Objects. It officially designates every cultural heritage object as state property, regardless of its actual whereabouts and ownership, while permitting private citizens and foundations to possess them as long as their “social functions” are intact. Cultural heritage items and sites were defined similarly along the lines of “man-made” objects with significant historical importance and aged at least 50 years old.

Addressing the elephant in the room: Culture’s history of neglect

After the New Order fell in 1998 under the Reformasi movement, the spirit of decentralization carried hope that regional governments could participate in managing their own cultural heritage. This would only come in 2010—twelve years into Reformasi—through the passage of Law No. 11/2010.

It would take another 12 years and three different ministers to complete and promulgate the implementing regulation for that law, Government Regulation No. 1/2022. According to a former official involved in the process, this was due to ministries and government bodies repeatedly deprioritizing provisions requiring their sign-offs. A telling reflection of how cultural heritage preservation has long been neglected by the government.

Over the past decade, and likely for long before that, cultural affairs have consistently received less than 0.1 percent of Indonesia’s national budget. Even after the Directorate General for Culture was elevated into a standalone ministry in 2024, its fiscal standing has stagnated.

That said, there is a bright spot. When it comes to Indonesia’s cultural heritage, repatriation from abroad, particularly the Netherlands, is a selling point.

Reclaiming our collective memory from the colonial gaze

Repatriation of Indonesian heritage items was among the demands of the new Republic in the 1949 Round Table Conference. While the transfer of sovereignty was formalized, the tense relations between the infant country and its former colonizer prevented any act of repatriation at the time. In fact, one of the articles in the conference agreement stipulated that the Dutch must return every Indonesian cultural heritage item it possesses.

It was under President Suharto that Indonesia’s first significant repatriation efforts with the Netherlands took shape. During his state visit to The Hague in 1970, Suharto was received by then-Queen Juliana, and the Nagarakretagama—a 14th-century Majapahit manuscript of enormous historical significance—was eventually returned to Indonesian hands. In 1978, the Dutch returned the famous 13th-century Prajnaparamita statue from the Singhasari Kingdom.

These returns were framed entirely within a Dutch paradigm of benevolence. The Netherlands decided what would be returned and how the narrative would be framed. According to archival research by heritage scholar Jos van Beurden, when talks of returning the Nagarakretagama manuscript surfaced, then-Dutch Prime Minister Piet De Jong supported its return as it would allow the Dutch to retrieve valuable VOC archives located in Indonesia’s National Archives building.

There was no overarching policy guiding what Indonesia should claim or what would happen to objects once they returned home.

The tides only began to shift 40 years later in the late 2010s. Former Western colonizers started to reckon more seriously with their colonial past. In 2017, French President Emmanuel Macron publicly vowed to return African heritage items looted by the French colonial forces. This reckoning added pressure on the Netherlands to do right by its own colonial history. For the first time, the Dutch cultural sector began engaging with its Indonesian counterparts in a fundamentally different register.

It was in this context that the Nusantara Museum in Delft, facing bankruptcy, offered its entire collection of 14,000 artifacts to Indonesia without charge. Then-Director General for Culture Kacung Marijan accepted the offer swiftly. A year later, his successor Hilmar Farid annulled the agreement, drawing confusion from both Indonesian and Dutch observers.

He called for the deal to begin from scratch, mandating that provenance research be conducted first to trace the historical and ownership origins of each object in the collection. Of the 14,000 items from the initial agreement, Indonesia agreed to receive 1,500 of them under the new agreement.

“It’s not simply about the return of objects; it’s about knowledge production. It’s about rewriting history; it’s about dealing with past injustices. That’s where I would locate the discussion of returning objects,” said Hilmar on the significance of provenance research.

Hilmar’s insistence on joint provenance research, rather than passive acceptance of whatever the Dutch offered, directly led to the creation of the Pilot Provenance Research on Objects of the Colonial Era (PPROCE), a joint project by Dutch cultural institutions, including the Rijksmuseum. It was the first-ever Dutch state-sponsored provenance research program for colonial artifacts, funded and commissioned by the Dutch Education, Culture, and Science Ministry. Over two and a half years, the project produced fifty provenance reports on 65 objects from Indonesia and Sri Lanka.

What followed from the methodological reset was a cascade of returns rooted in provenance. In July 2023, the Netherlands returned 472 cultural artifacts to Indonesia in a ceremony at the Museum Volkenkunde in Leiden. Among them were four 13th-century Singhasari statues depicting Hindu deities held in Dutch collections since the 19th century, as well as objects looted during colonial military campaigns in Java and Bali.

A second return followed in September 2024, when 288 more objects were handed over at the Wereldmuseum in Amsterdam, including 284 items from the Puputan Badung collection—weapons, coins, jewellery, and textiles taken after the Dutch conquest of southern Bali in 1906. In total, over 800 objects were returned under the 2022 repatriation deal by the end of 2024, with the Indonesian government committing to dedicated conservation programs, scholarly research, and public exhibitions to give the returned objects meaning beyond their display cases.

Despite the modality shift in repatriation efforts, the lingering concern about whether these artifacts could actually be cared for at home persisted. The Indonesian government had gained diplomatic leverage in negotiations with the Netherlands, but the domestic infrastructure to safeguard what came remained a work in progress.

Getting our museums in check

It is simply impossible for the state to maintain every museum and heritage site, given the sector’s political and financial neglect. Museums and heritage sites are often poorly managed, forgotten, or left to rot.

In 2020, the former education and culture minister Nadiem Makarim declared that only 39 museums, or 8 percent of Indonesia’s total museums nationwide, met the government’s own highest standard of management and service. Of the 288 government-managed museums at the time, the majority were categorized as Type C, meaning they had buildings and collections but minimal funding, no digital infrastructure, and inadequate conservation facilities.

Nadiem noted that a flawed governance system and the lack of competent human capital within the bureaucracy explained the troubling situation. Before his regime, government-run museums and heritage buildings were directed by third-echelon civil servants from the ministry, under a rigid bureaucratic system. Human capital for museum management was also obsolete, lacking adequate experts and professionals.

The term “museumkan,” which literally translates to “to museum” (verb), was widely used to describe ageing or disgraced civil servants who were transferred into museum management because it was seen as an undesirable sector.

“Most museum staff are themselves ‘museumified’, those who are no longer useful elsewhere, who are about to retire or are underperforming, get stationed in a museum,” said Irmawati Marwoto, archeology professor at Universitas Indonesia.

These historic challenges became the reason why the former Education and Culture Ministry created the Indonesian Heritage Agency (IHA) in 2023. The IHA was made to introduce an innovative public-private partnership model for museum and heritage site governance. It designated 34 museums and heritage sites as autonomous Public Service Agencies (BLUs). The National Museum in Jakarta, Fort Vredeburg in Yogyakarta, Sangiran Early Man Site in Srangen, and many more notable museums and heritage sites were all turned into autonomous institutions under the IHA.

The BLU model can be seen as a push towards enterprising the public sector without the for-profit motive of the private sector. Management of BLUs is rooted in maximizing efficiency and self-sufficiency for public service, allowing these agencies the freedom to reel in new funding models and acquire talent from outside the bureaucracy. This model is most common in the healthcare sector, wherein public hospitals are turned into BLUs to reel in healthcare specialists from the private sector who are absent from the bureaucratic talent pool.

In the cultural heritage context, the BLU model allows for greater independence for historical institutions to govern efficiently without the constraints of bureaucratic inertia. Cultural experts, museum curators, academics, and other professionals from the private sector can now be recruited to participate in conservation and preservation efforts. BLUs can also directly receive grants and donations from the private sector to help fund their operations.

This public-private partnership model is a step towards raising Indonesia’s museum governance to international standards. In the United Kingdom, major national museums incorporate a blended governance model, pooling funds from private endowment and government support.

The British Museum, for example, is also an independent non-departmental public body, a structurally similar model to Indonesian BLUs. The museum is governed by an independent Board of Trustees and funded through a combination of government aid from the Department for Culture, Media and Sport and income it generates through commercial activities, private donations, endowments, and exhibition fees.

This dual-funding structure gives the museum financial flexibility to operate autonomously without being wholly dependent on the state, while remaining publicly accountable as an institution that is adjacent to the government.

While it may take years or even decades before museums in Indonesia can reach the institutional standards of the British Museum, the IHA is a significant step towards realizing that dream, with cultural heritage items that actually belong to the land they originated from.

Where to go from here

Under the current Prabowo administration, creating a standalone Culture Ministry is a start. It signals political will and is a good sign that cultural affairs will hopefully be taken more seriously. However controversial, perhaps having a figure like Minister Fadli Zon, who has close ties to the President, may also help in sustaining said political will.

Political appeal, however, should come with grace and humility. The current regime should follow through with what its predecessor has done for the sector without shaking things up too fast out of ego. It is too soon to tell how effective the IHA will be, but it is important to allow the agency and the cultural institutions inside of it time to work autonomously without interference from the ministry.

Perhaps, in time, more museums and heritage sites can follow suit, revitalizing the industry and opening up more jobs for cultural practitioners and experts in a field that has historically been neglected.

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We consulted the former Director-General for Culture at the then-Education and Culture Ministry, Hilmar Farid, in the writing of this article.

What does an ideal family look like to you? Is having a life partner with two or three children just the right amount? Or are kids not at all in the picture? If your answer happened to be a family of four with two children, this preference may not entirely be authentic. Instead, it may have come from decades of social engineering.

Sixty years ago, Indonesian women were having nearly six children on average, doubling the population every generation. But what followed was one of the most successful family planning programs of the 20th century, dubbed Keluarga Berencana (KB).

Politically neglected by Indonesia’s first president, Sukarno, family planning became a flagship program under Suharto’s authoritarian New Order regime—perhaps not out of goodwill but of necessity. Despite being top-down in nature, the program employed innovative social campaigns and bottom-up approaches, which contributed significantly to its overall success: reducing the country’s total fertility rate (TFR) from 5.8 children per woman in the 1950s to 2.1 by 2025, reaching the global standard.

In this edition of The Reformist, we look back six decades to understand what made Indonesia’s family planning program work as a reform.

But first, let’s talk about why it didn’t happen during Sukarno’s Old Order.

Dissecting Sukarno’s pro-natalist Old Order

After gaining independence in 1945, Indonesia’s population was growing at a rate that would cost the government significantly in the long run. By the mid-20th century, the country’s population was expanding at roughly 2.8 percent per year, with an infant mortality rate of 145 deaths per 1,000 births, contraceptive prevalence among women below 5 percent, and a Total Fertility Rate (TFR) of 5.8 children per woman.

As an infant nation with a fragile economy, development would have been difficult if no action were taken. Something had to give, and founding father Sukarno was not budging.

Sukarno was known for his pro-natalist stance, often flaunting Indonesia’s power by highlighting its large population. He once boasted that “Indonesian people breed like rabbits. Ten, twelve, fourteen children. This is normal, and we have a large country.”

Instead, family planning initiatives under the Old Order were mostly driven by private actors. Doctors, academics, physicians, and progressive elites quietly promoted birth control from the early 1950s despite the unfavorable political climate. In 1952, a group of prominent women in Yogyakarta established a Family Welfare Foundation that included contraception among its services, carefully avoiding the phrase “birth control” for fear of its social implications. By 1957, the Indonesian Family Planning Association (PKBI) was formally established, notably with Sukarno’s own personal physician as its head.

Things changed rapidly once Sukarno fell and Suharto came into power.

Here are three takeaways on how Indonesia launched a relatively successful family planning program in the new era:

I. Technocratic approach supported by strong political will

Foundations of state-sponsored family planning

The zeitgeist of the mid-20th century was the perceived existential threat that Earth’s available natural resources would not sustain the rapidly growing human population. This phenomenon was coined Neo-Malthusian, after the English economist Thomas Malthus, whose theory stated that food supply would never be able to keep pace with unregulated population growth, inevitably causing widespread poverty, famine, and war.

This craze spread across Western governments and international institutions alike, driving a wave of donor-funded population control programs across the developing world.

In addition to international pressure, local technocrats from the National Development Planning Agency (Bappenas) also warned President Suharto that Indonesia’s population growth rate had to be controlled for sustained economic development to happen.

Having just seized power under an economic development platform, Suharto gave the family planning initiative high priority, showcasing that ‘political will’ does factor into whether a policy can or cannot work.

Political and economic structure behind family planning

After signing the United Nations (UN) declaration on the World Population in 1967, Suharto kick-started his family planning program through Presidential Instruction No. 26/1968, creating the National Family Planning Institute (LKBN). The National Family Planning Coordinating Board (BKKBN) was then established under Presidential Regulation No. 8/1970 and listed among the priorities in the New Order’s first five-year development plan (Repelita).

Financial endowments from both the state budget and international donors were crucial to the longevity of this program. In the BKKBN’s infancy, the government provided US$ 1.3 million to the program, with an additional US$3 million from international donors. This figure rose steadily year after year. In 1977, US$28.5 million from the state budget was used, rising further to US$34.3 million the following year.

The large bulk of the program’s funding, however, came from different international donor sources. Countries like the United States, through USAID, the Netherlands, and institutions like the World Bank and the United Nations Population Fund (UNFPA), have all endowed the Indonesian government and BKKBN since the program’s founding. From 1968 to 1998, these four donors contributed more than half a billion US dollars for the family planning program.

II. Top-down objective, bottom-up implementation

The program had two official objectives from the outset. The first was improving the health and welfare of mothers, children, and the family at large. The second was raising the standard of living by reducing the birth rate, ensuring that population growth would not outpace economic production. In practice, the program pursued these goals through two main channels: contraceptive service delivery and information, education, and communication—known within the program as KIE.

On the services side, the program began as a clinic-based operation concentrated in Java and Bali. Clinics provided contraceptives—primarily IUDs and birth control pills—through the Health Ministry’s network of community health centers (‘Puskesmas’). But officials quickly realized that clinics alone could not reach the tens of millions of eligible couples spread across 22,000 villages.

By the second Repelita in 1974, the BKKBN had pivoted to a community-based model. Trained fieldworkers were deployed to live and work in the communities they served. Village-level contraceptive distribution centers were established, stocking pills and condoms so that women could access them locally rather than traveling to distant clinics. Village volunteers—often recipients themselves—ran monthly meetings where supplies were distributed, motivation was reinforced, and community activities like nutrition courses and savings lotteries were held alongside family planning discussions.

The KIE effort was equally ambitious. The BKKBN went out of its way to change the way Indonesians thought about family size altogether. Fieldworkers went door to door. Community and religious leaders were enlisted to carry the message. The program made use of traditional local institutions. In Bali, for example, the banjar (a hamlet-level cooperative unit) was recruited to normalize family planning as a community matter, with household heads required to publicly report the contraceptive status of every married woman of reproductive age under their roof.

The BKKBN’s role within all this was formally that of a coordinator rather than a direct implementer. Its major functions were to set policy guidelines, channel funds, and monitor the work of implementing units.

III. Amassing public support: Grounded campaigns and threading religious sensitivities

Even with Suharto’s nod of approval, extensive social engineering had to be done to normalize the program among the masses. Given Indonesia’s large rural and religious population, acceptance of the program meant having to shift national social norms that had been centuries in the making.

Before family planning was initiated, the phrase “banyak anak banyak rezeki” (many children equal many blessings) was the dominant belief. Children were seen as gifts from God and a telltale sign of future prosperity. Under Suharto, this framework was systematically reframed. The new slogan of “dua anak cukup” (two children are enough) was plastered, directly and indirectly, across state-sponsored advertisements, postcards, stamps, national speeches, and every other available medium.

PSA campaigns aside, the regime also understood that the program could not succeed through government messaging alone. With Muslims making up nearly 90 percent of Indonesia’s population, the moral authority of Islamic leaders was not something the BKKBN could afford to work against.

As early as 1968, before the BKKBN was even formally established, Suharto’s government held closed-door discussions with national religious leaders to reach a consensus on which contraceptive methods could be religiously sanctioned. Abortion and sterilization were ruled out and kept off the official program. The IUD raised extensive debate, but was gradually accepted by religious authorities, provided insertion was performed by a female doctor or, in emergencies, a male doctor in the presence of the woman’s husband. By the end of the New Order, birth control pills and injections were the main contraceptives used in the program

The two major Islamic mass organizations—the Nahdlatul Ulama (NU) and Muhammadiyah—were the primary targets of this outreach. NU, the organization with a larger rural base, issued a declaration in 1969 framing family planning “not as limiting family size but as spacing pregnancies for the welfare of mothers and children.” Muhammadiyah followed a similar path, ruling in 1971 that family planning was permissible provided it served the well-being of families and society.

Once national religious leaders were on board, the BKKBN worked downward. Family planning fieldworkers were instructed to actively involve local religious figures—the kyai, or Muslim clerics—in their outreach activities. In known strongholds of orthodox Islam, such as East Java, Madura, and Aceh, the legitimizing power of these local leaders was especially critical. For ordinary villagers, whether modern contraception was morally permissible depended in large part on what their local kyais said.

While largely effective in securing local support, the approach was not without friction. Religious opposition never fully disappeared, and family planning would often become a proxy for broader resistance to the New Order regime.

The result speaks for itself

Indonesia’s total fertility rate dropped from 5.6 children per woman in the mid-1960s to 2.1 in 2025. Accompanying this was a parallel drop in infant mortality, from 146 deaths per 1,000 live births in 1960 to around 17 per 1,000 in the present day. In achieving its stated goal of controlling population growth, the program was, by conventional measures, a success.

The program’s emphasis on reaching rural areas has also left lingering effects in the present day. In a 2018 survey conducted by BKKBN, the agency found that contraception use in rural areas stood at 64.2 percent, slightly higher than the 63 percent in urban areas, making villagers more “woke” than their metropolitan counterparts.

Beyond fertility rates, the program reshaped Indonesia’s population growth to a much more sustainable rate. The population growth rate, which stood at 2.8 percent in the mid-1960s, fell to 1.49 percent by the 1990s and 2000s, and has since declined further to around 1.1 percent between 2020 and 2025. The contraceptive prevalence rate, which had been below 5 percent when the program launched, reached 57 percent among married women by the end of the New Order, and around 61 percent by 2025.

Objectively, the family planning program was a major success in achieving its goal of meeting demographic targets. With a controlled fertility rate, Indonesia positions itself strategically as a country that is young enough to continue existing while not growing fast enough to significantly strain the nation’s budget and its limited natural resources.

But it came with a cost

It is unjust to laud the program’s success without mentioning its glaring social costs. Given Suharto’s top-down approach, methods of coercion were commonplace throughout the program’s implementation. This was most evident in the experiences of women—the overwhelming majority of program recipients—who were treated not as individuals with agency but as targets of a demographic goal.

The BKKBN’s conception of women was narrow: wives and mothers, not individuals with independent reproductive rights. It wasn’t uncommon to hear stories of women coerced, pressured, or manipulated into accepting contraception—particularly IUDs—without informed consent.

The military conducted annual “social service” visits called Safari, in which soldiers descended on villages to recruit family planning acceptors, often arriving with quotas to fill. Their presence alone was enough to intimidate; in areas where Safaris were announced, women would hide in their homes to avoid being pressured on the spot.

A lesson for the current administration

President Prabowo Subianto has ambitions arguably grander than family planning, like ensuring free meals for millions of students and developing Indonesia’s village-level economy through 80,000 cooperatives. These are programs that cost our taxpayers hundreds of trillions of Rupiah, whose implementation has been questionable at best and burdensome at worst.

We think the three lessons outlined in this piece could be useful for how these flagship programs should be implemented: careful planning and technocratic solutioning, balancing top-down and bottom-up approaches, and getting widespread public support through understanding local contexts.

Editor’s note: Most of the information gathered for this analysis came from the book Two Is Enough. Family Planning in Indonesia under the New Order 1968-1998, edited by Anke Niehof and Firman Lubis. We cannot recommend this book enough as a comprehensive deep dive into Indonesia’s family planning program.

Do any of our readers work within the public health and family planning sector? We would love to hear your take on this issue and any on-ground stories that could enrich this discourse with more context and nuance! Comment below or reply to this email.

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Editors: , , Ravio Patra

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In our previous edition, we asked why Indonesia’s decentralization feels like a myth. Why, despite the autonomy, have our localities not succeeded economically? We argued that centralized fiscal structures have largely disincentivized regional governments from creating any meaningful economic growth for their respective localities. But what if one of our regions does have a special privilege over most and is actually allowed larger fiscal autonomy? Would it be more economically successful?

These questions have been asked more frequently in the wake of last year’s Sumatra disaster. Many viewed the government’s response as slow and inadequate, including us. But a major debate particularly ensued on the old-age motion of whether the primary duty ultimately falls on the central or local government. In Aceh, specifically, this debate struck a nerve given its special autonomy status.

To answer these questions, we took a closer look at the special autonomous region of Aceh. In theory, it should be the antithesis of our proposition that decentralization is a myth. It has greater ‘autonomy’ by law, enacts Sharia Law, has its own local political parties, and is even allowed to represent itself in international sports competitions separate from the Indonesian national team.

Quick context

After decades of bloodshed and separatist ambitions, the Free Aceh Movement (GAM) and the Indonesian government negotiated in Helsinki, Finland. With the historic Helsinki Memorandum of Understanding (MOU) in 2025, Indonesia did not just agree to an administrative ‘anomaly’. Jakarta’s decision to grant Aceh special autonomy did not just end decades of armed struggle for independence, but redefined what it means to be a united republic.

The following year, these commitments were codified under Law No. 11/2006 on the Governance of Aceh (’UUPA’). This became the constitutional backbone of Aceh’s special autonomy.

With UUPA set to be revised this year by the House of Representatives, we believe it would be helpful to look back at what has happened over the past 20 years—what worked and what didn’t—to ensure that any changes made by the House uphold the values of Aceh’s long march towards decentralization.

I. Hyperlocal politics, beyond Sharia Law

Most people know Aceh for being one of the only administrative regions in the world that enacts Sharia Law. Yet, there is so much more to it, including a political landscape that allows for a level of self-governance found nowhere else in Indonesia.

While Sharia Law is a significant pillar of this identity, mentioned 34 times in UUPA, another distinctive political feature of Aceh is the right to establish and field local political parties.

Local Political Parties

The Aceh Party, founded in 2007 and the political vehicle for a majority of former GAM combatants, has dominated the local legislature, consistently gaining a plurality in Aceh’s Provincial Legislative Council (DPRA) since local legislative elections were held in 2009.

Of the four Aceh governors who have come to power since 2005, three were former senior GAM officials, and all were fielded by local parties. This includes incumbent governor, Muzakir “Mualem” Manaf, who was GAM’s commander-in-chief during the height of the insurgency in the early 2000s and became Chair of the Aceh Party since its inception in 2007 following the Helsinki MOU.

If there is one success that can be attributed to the peace treaty, it is its ability to shift the way former rebels demanded political change, away from the battlefields and into the local political structure.

This raises the question of whether a similar model could be applied elsewhere in Indonesia. While not tested at scale, this decentralized model provides a more direct channel for societal aspirations that often get diluted within the default framework offered by ‘national’ political parties.

Qanun and the Wali Nanggroe

Administratively, the province is governed similarly to other provinces in the country. The governor leads the executive branch, while the DPRA drafts local regulations (‘Perda’), known as qanun in Aceh. While other localities base their regulations on the 1945 Constitution (‘UUD’) and laws (‘UU’), qanuns are shaped by Sharia Law and local customs. Under Article 23 of the UUPA, the DPRA possesses sole authority in drafting qanuns, with the governor acting as a deliberating partner.

The province also has a special customary body, the Wali Nanggroe, which is led by a senior Acehnese figure of high standing. Its mandate is given under Article 96 of the UUPA to protect the unity and integrity of the Acehnese people.

While the role of Wali Nanggroe remains symbolic, its creation is an important prerequisite in the Helsinki peace talks.

Twenty years on, the presence of local political parties and the Wali Nanggroe is now fully entrenched within Aceh’s version of democracy. By restoring traditional terminologies (e.g., subdistricts to Mukim and villages to Gampong), Aceh ensured the integration of its historic identity into the present. Culture and customs that were once repressed are now able to take center stage. That said, these cultural victories have yet to translate into functional governance and material gains for every Acehnese to enjoy.

II. The rights to woo foreign investors

From the outset, the UUPA grants several autonomous rights allowing for greater Acehnese representation abroad. The provincial government is not only allowed to create and seek economic partnerships with foreign institutions, but also represent itself in international cultural forums and sports competitions, as well as regulate its own foreign investment.

Article 9 (1): The Aceh Government may establish cooperation with foreign institutions or agencies, except for those falling under the authority of the Central Government.

Article 9 (2): The Aceh Government may participate directly in international arts, cultural, and sporting activities.

Article 165 (2): The Aceh Government and regency/city governments, in accordance with their authority, may attract foreign tourists and grant permits related to investment in the form of domestic investment, foreign investment, exports, and imports, while observing nationally applicable norms, standards, and procedures.

Presidential Regulation No. 11/2010 further regulates international cooperation between Aceh and foreign entities, granting them “full power” to finalize overseas partnerships independent of the Indonesian Foreign Ministry. Meanwhile, Article 186 of the UUPA allows Aceh to seek external loans from outside Indonesia, albeit with the central government as an intermediary and prior approval from the Finance and Home Ministries.

As a caveat to this newfound freedom, the provincial government is prohibited from managing and engaging in cooperation that is “national in nature,” which includes “foreign policy, defense, security, justice, national monetary and fiscal matters, and certain matters in the field of religion.”

But despite its special autonomous rights, foreign direct investment (FDI) remains significantly low.

Source: GRDP, FDI (FDI values were converted to IDR at January 1, 2024’s exchange rate of Rp 15,510/USD)

In 2023, Aceh’s FDI to Gross Regional Domestic Product (GRDP) ratio of 1.7 percent ranked 23rd among Indonesia’s 38 provinces. Legal uncertainty, pervasive corruption, central government overreach, and ambiguity over how foreign capital aligns with Sharia Law continue to constrain its economic growth.

III. Special fiscal structure

Extractive sector revenue-sharing

The UUPA prescribes a special revenue-sharing scheme for the exploitation of Aceh’s vast oil and gas reserves.

To an extent, the creation of GAM could be attributed to Aceh’s historic inability to claim credit for its own natural resources. As this grievance paved the way for a structural overhaul of Aceh’s finances, reclaiming a favorable revenue split with Jakarta became a non-negotiable prerequisite during the Helsinki peace talks, eventually granting Aceh a 70-percent share.

Yet, even with these hard-earned concessions, oil and gas revenues contribute an insignificant amount to Aceh’s regional income in the present day, accounting for only a pitiful 0.6 percent of Aceh’s total budget.

Aceh must face the reality of its resource trap. As natural reserves deplete, the energy sector no longer provides a significant boost to the local economy.

​​Over the past decade, economic growth excluding oil and gas has performed better than with it included. Even when growth is larger with oil and gas, its effect on the overall economy is minimal at best. Except for 2022, when oil production exceeded the annual target, oil and gas production have dragged the local economy significantly.

Simply put, Aceh’s extractive sector is shrinking faster than the rest of the economy is growing. Diversification is therefore essential if Aceh wishes to realize its economic potential, especially considering how much oil and gas prices fluctuate in the global market.

Special autonomy fund

The true backbone of Aceh’s economy lies in its dependence on central government aid. On top of the normal central government cash transfers (‘TKD’), Article 183 (2) of the UUPA guarantees 20 years of special autonomy fund allocation from the national budget. These comprise an equivalent of 2 percent of the state’s general allocation fund (DAU) for the first 15 years and one percent for the final five years.

The special autonomy fund has profoundly shaped Aceh’s public finances to this day. In 2022, the final year of the two-percent allocation, the province generated Rp 13.7 trillion in local revenue. Of that amount, Rp 7.5 trillion (54 percent) came from the special autonomy fund. When the allocation was reduced to one percent the following year, Aceh’s annual revenue fell by approximately Rp 3 trillion.

For Aceh to become sustainable moving forward, it must find ways to maximize the different provisions endowed to it in the UUPA. It simply cannot rely solely on the special autonomy fund if it wishes to truly be self-governing.

But Jakarta is hardly an innocent party here as it uses the special autonomy fund to exert control on the local government apparatus.

Jakarta’s encroaching hand

It is important to preface that Aceh’s 20-year development cannot be separated from its proneness to natural disasters. After ratification of the UUPA in 2006, the local government only began inheriting the economy from the Aceh-Nias Reconstruction and Rehabilitation Agency (BRR) in 2009.

Since then, Aceh’s economy has grown steadily, albeit rather slowly, at around 4 percent in the last decade. Significant work remains to truly realize Aceh’s unfulfilled potential, especially on these three stubborn problems:

Pervasive corruption

Nothing illustrates systemic corruption in Aceh better than the case of Irwandi Yusuf, its first directly elected governor post-Helsinki. In 2018, during his second term in office, Irwandi was arrested by the Corruption Eradication Committee (KPK) in a high-profile sting operation. He was convicted of accepting bribes and embezzling over Rp 42 billion, including from the special autonomy fund.

The absence of technocrats

However, “bad actors” only account for half of the story. The second hurdle is a lack of technocratic capacity within Aceh’s bureaucracy. While the peace treaty successfully moved former combatants from the battlefields to the bureaucracy, it did not automatically endow them with the technical expertise required to govern and develop the region. Most especially, the province lacks economists and practitioners capable of implementing long-term development programs.

Half-hearted decentralization

As established in our previous volume, Jakarta tends to half-heartedly grant true autonomy to local governments. Aceh is no exception, even with its special autonomy. Over the last decade, a wave of centralizing national regulations quietly chipped away at Aceh’s special autonomy. In 2013, then-President Susilo Bambang Yudhoyono threatened to revoke Qanun No. 3/2013 for using the GAM symbol in Aceh’s official flag. It was eventually revoked by the Home Affairs Ministry in 2016 without prior consultation with the DPRA.

Jakarta’s “invisible hand” came into play again in the saga of PT Emas Mineral Murni (PT EMM), which received a 10,000-hectare gold mine concession across Nagan Raya and Central Aceh in 2017 from the Investment Coordinating Board (BKPM).

Using Law No. 23 of 2014 on Local Governments (‘UU Pemda’), Jakarta bypassed Aceh’s local authority, arguing that it possessed complete authority to issue permits for foreign investment. The DPRA viewed this as Jakarta undermining Aceh’s special autonomy as mandated by Article 156 of the UUPA.

In 2019, the controversial Omnibus Law on Job Creation was opposed by the local labor force on the basis of Qanun No.7/2014, which provided fairer work hours to Acehnese women, bank holidays to commemorate the tsunami, different compensation schemes for bonuses, and stricter regulations on foreign workers. This, however, fell on deaf ears.

Meanwhile, Government Regulation No. 3/2015 shrinks Aceh’s autonomy by unilaterally rendering an additional 32 areas of governance as national affairs. Among others, these include land administration, education, health, environment, forestry, as well as energy and mineral resources. Central government oversight varies from leading direct implementation to setting norms and best practices for local government to comply with.

While the UUPA was a breakthrough in reimagining decentralization, Jakarta’s overreach and inconsistent regulatory approach showcase the central government’s reluctance to release its tight grip on the region.

The way forward

With revision of the UUPA already underway, the main talking point will center around Aceh’s special autonomy fund. Some factions within the House of Representatives in Jakarta will seek to reduce it, while the Acehnese government and its few allies will seek to retain it, especially as the region rebuilds after the 2025 disasters.

What we do know for sure is that any changes to the special autonomy rule must be paired with greater decentralization in practice. Jakarta needs to trust Aceh to address its corruption problem, reform its bureaucratic ranks, and attract investment within the agreed corridors.

Politically, the UUPA revision must seek to strengthen and fortify local political parties in Aceh, which have played a pivotal role in ushering peace for the last 20 years.

While nowhere near perfect, Aceh is a reminder that autonomy is possible under Indonesia’s unitary framework. And for that to continue to be the case, Jakarta must fulfill its end of the bargain and refrain from reclaiming power back to the central government.

Special mentions:

We consulted Muhadam Labolo, Chair of the Indonesian Society for Government Science (MIPI), and Rozi Beni, an alumnus from the Faculty of Law at Universitas Indonesia, to ground our analyses in the writing of this piece.

Writer/Researcher:

Editors: , , Ravio Patra

Visual designer:

Local autonomy in Indonesia has been under continuous attack since President Prabowo Subianto took office, from the 2025 austerity measures that devastated local budgets to the recently growing talks of scrapping direct local elections. While local governments are frequently blamed for weak and corruption-ridden governance, a more fundamental question is often ignored: are they politically inadequate, or were they never given the economic space to succeed in the first place?

Two decades ago, decentralization was hailed as a new hope for post-reform Indonesia. When students marched their way onto the steps of the House of Representatives in 1998, the call for greater political liberty was at the forefront. After decades of authoritarian rule, local governments were finally able to dictate how they wished to govern themselves and their people without the outstretched control of the central government.

After assuming the presidency in 1998, B.J. Habibie introduced sweeping reforms to stabilize Indonesia’s fragile political landscape and restore public trust in government. A year into power, Habibie introduced Law No. 22/1999 on Local Governments, giving provincial, regency, and municipal administrations greater political and, in theory, economic freedom.

Article 7 of the law states that local governments are given full autonomy to plan and formulate their own development plans aside from the fields of foreign policy, defense and security, the judiciary, monetary and fiscal affairs, and religion.

Under Megawati Soekarnoputri’s presidency in 2004, the same Law was revised to introduce direct local elections, providing local communities the right to choose their governors, regents, and mayors.

While this era of political liberalization opened new civic opportunities for the Indonesian people, economic freedom and decentralization, on the other hand, have remained a constant hurdle, as a large majority of local administrations in the country are fiscally dependent on central government transfers (TKD).

Decentralization is not a static endpoint. It’s a pendulum that swings through financial crises and political power struggles. The question we seek to answer in this piece is not whether decentralization works, but whether its implementation has honored the objective set out after Reformasi.

In this edition of The Reformist, we unearth the hidden economic realities of Indonesia’s subnational governments and the lessons Indonesia can take from an unlikely neighbor up North.

Political autonomy without fiscal capacity

The issue of economic decentralization lies in the amount of revenue that flows away from local governments and into the hands of the central government. While industries, factories, and mines are built on local land, their tax revenues are fully directed to the national government. Levies like the income tax (PPh), value-added tax (VAT/PPN), and luxury tax (PPnBM) are all managed by the central government, leaving subnational governments with no money to show for their labor.

Within the income tax regime itself, central control extends across nearly all major subsectors. Personal income tax (PPh Orang Pribadi), corporate income tax (PPh Badan), and income taxes derived from strategic sectors such as oil and gas (PPh Migas) are all collected by the national government. While portions of these revenues are later redistributed to provinces and districts through revenue-sharing arrangements (DBH, Dana Bagi Hasil), these transfers are deliberated without the involvement of local governments.

Taxes collected by the central government constitute an overwhelming majority of total government revenue, amounting to Rp 2,309 trillion in 2024, around eight times the Rp 273.15 trillion collected by all local governments combined.

The following table summarizes how taxes collected by the central government are distributed back to the localities. While the term “revenue sharing” implies fair redistribution, the real revenue-making heavyweights, the VAT and corporate income tax, are enjoyed solely by the central government.

As a result, local governments are left with a narrow, commercially driven tax base for their locally-sourced income (PAD). Local governments rely on hotel, restaurant, entertainment, advertising, parking, and street-lighting taxes, alongside vehicle-related levies such as the motor vehicle tax (PKB), vehicle title transfer fees (BBNKB), and fuel taxes (PBBKB).

While local governments have also gained authority over land-based taxes such as the land and building tax (PBB) and the land and building title transfer duty (BPHTB) since 2014, these sources have been insufficient to increase fiscal autonomy—how much expenditure (not revenue) budget is available for local governments to spend at their own discretion.

What has occurred in recent times is not a reinvention of what it means to have fiscal autonomy, but a gradual erosion of resource availability. This makes localities depend much more on TKD, as was the case with President Prabowo’s sweeping austerity measures, but without a corresponding reduction in responsibilities.

The disparity between high local production and low revenues can be visualized through the graph below.

Public expenditures from all three levels of local government amount to only around six percent of the country’s total GDP. This is despite the economic activities occurring at the subnational level and the hundreds of trillions of rupiah that flow to localities through the DBH and TKD. In contrast, central government spending accounts for over 11 percent of Indonesia’s total GDP, almost double the combined local share, underscoring how fiscal capacity remains overwhelmingly concentrated in the hands of the central government.

This stark divergence illustrates the core imbalance of Indonesia’s decentralization framework: while economic activity is geographically dispersed across localities, fiscal power remains highly concentrated at the center. In other words, the current local autonomy setup effectively decentralizes political risks but not fiscal responsibility.

Without fiscal independence, politics are messy

Data from the Finance Ministry reinforces how far economic decentralization has lagged behind its political counterpart. Despite a gradual rise in average local fiscal independence, most local governments remain structurally dependent on TKD.

This structural dependence became painfully visible when President Prabowo rolled out the aforementioned austerity measures in early 2025, slashing local transfers by up to Rp 50.59 trillion from Rp 919 trillion to Rp 848.52 trillion. For many local governments, the cuts exposed how little room they had to maneuver fiscally.

The fallout was most vividly illustrated in Pati, East Java, where regent Sudewo raised the PBB tax by as much as 250 percent after the locality struggled to meet its Rp 2.87 trillion revenue target, which largely came from already-reduced central transfers.

The tax hike in Pati snowballed into one of the largest political scandals last year when over 100 thousand protestors filled the streets calling for Sudewo’s impeachment. The protests generated nationwide sympathy and amplified public distrust of the central government’s lackluster economic policies, culminating in the August 2025 demonstrations.

Instead of reconfigurating its fiscal policies, the 2026 APBN has reduced local transfers even further, falling to Rp 693 trillion. While the current administration has framed these measures as necessary “shock therapy” for poor-performing local administrations, they are unlikely to resolve Indonesia’s long-term structural problems.

If anything, President Prabowo’s approach signals a renewed inclination toward economic centralization rather than a serious push to strengthen local fiscal capacity.

Economic decentralization, the Chinese way

Critics have often labeled local governments’ economic dependency on the central government as a mere symptom of the unitary system under which Indonesia operates. A federal system is often seen as a just alternative, given its foundation on greater separation of powers. In the United States, each of the 50 different states is allowed to enact its own set of taxes and regulate intrastate commerce.

While the system has its merits, improving local economic autonomy doesn’t have to begin with such a drastic constitutional overhaul. A more pragmatic set of lessons can be drawn from Indonesia’s giant neighbor to the north: China.

China is a unitary, authoritarian one-party state that often finds itself at odds with the West. Yet, at the same time, it is one of the most economically diverse and dynamic countries in the world. Following Deng Xiaoping’s “Opening Up” reforms in 1979, China experienced decades of rapid growth, driven in no small part by reforms that reshaped the fiscal relationship between Beijing and its provincial-level governments.

Under China’s economic model, local governments are strongly incentivized to grow their own economies. Provinces and cities retain substantial portions of locally generated revenues and are encouraged to attract foreign investment, expand industrial bases, and increase employment.

Local administrations are even permitted and encouraged to seek foreign investment abroad, equipped with their own foreign affairs delegation. The more companies, industries, and investors that enter a locality, the greater its fiscal returns. This makes local governments thrive economically, though we acknowledge that there is a separate debate to have on democratic accountability.

In one example from last year, a local delegation from the export-heavy Zhejiang province was sent to the United States to seek business opportunities for its local industries, despite growing geopolitical tensions between Beijing and Washington over tariff disputes.

Funnily enough, Aceh province’s special status allows the country’s westernmost locality to do just this.

Under Article 165(2) of Law No.11/2006 on Aceh, the provincial Aceh government is legally allowed to “attract foreign tourists, and issue permits related to investment in the form of domestic investment, foreign investment, exports, and imports, while observing nationally applicable norms, standards, and procedures.”

We will reserve our analysis of Aceh for now. Stay tuned for our next volume, where we will be covering Aceh’s special autonomous status, 20 years on. Be sure to subscribe!

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Indonesia’s local governments do control a wide range of commercial-based levies. which contrasts with China’s far greater emphasis on industrial-based taxation. Through its 1994 tax reform policy, China’s local governments were introduced to new levies like the urban real estate taxes, housing taxes, state-owned land-use taxes, cultivated land occupation taxes, and deed taxes.

They also benefit from a business tax, individual income tax, income tax from locally based enterprises, and profits from local state-owned enterprises, further strengthening the link between industrial activity and local revenue.

China also has a unique tax-sharing scheme, splitting VAT revenues evenly between the central and local governments. When taking into account that VAT contributes the most to China’s total tax revenue at 38 percent, it is clear that fiscal design is shaped with local governments in mind. These administrations benefit directly from expanding their economic base, creating strong incentives to industrialize.

It’s time we take decentralization seriously

Indonesia should aspire for a reality in which a regent in Nusa Tenggara Timur or a mayor in Sulawesi has the fiscal capacity to plan, invest, and innovate without depending on annual transfers from the central government. China’s model is by no means without flaws, especially noting the ongoing local debt stress, but it at least gives local administrations fiscal autonomy.

Indonesia’s opportunity is not to replicate China’s approach altogether, but to borrow its incentive scheme, so that localities could drive up local tax revenue, while carefully mitigating the debt trap. This means giving local governments both the opportunity to benefit from local economic growth and the responsibility to bear the consequences otherwise.

Without genuine decentralization, local governments will continue to operate at a deficit: accountable for service delivery without the fiscal capacity to drive outcomes. Prabowo’s growing centralization efforts certainly don’t help address this systemic hurdle.

If the President and his administration are serious about uplifting the welfare of local communities across the country, updating the decentralization model—instead of ransacking it completely—may prove far more effective in realizing Prabowo’s ambitious economic goals.

What are your takes on Indonesia’s state of decentralization today? Discuss below!

Writer, researcher:

Editors: , , Ravio Patra

Expert advisor: Paramagarjito Budi Irtanto

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To corrupt politicians, the Corruption Eradication Committee (KPK), at its peak, was perhaps like a group of pesky mosquitoes. Tiny, loud, and somehow always around, lurking in the corner, ready to attack anyone.

Since its birth, the KPK has challenged longstanding norms within the country’s bureaucracy. Established in 2002, it was a radical reform trying to tackle a stubborn problem: widespread graft plaguing the system. It acted as a powerful watchdog; a deterrent for ruling elites from acting out of order.

We’ve covered the devious details in the corruption law before, but let’s now go back in time to trace the story of a little giant that was the KPK. In this edition of The Reformist, we track the foundations of Indonesia’s once iconic anti-corruption body, from its hopeful inception to its tragic downfall. As parroted countless times before, reinstating the entity to its former powers must be done if anti-corruption is to be taken seriously by this current administration.

Here is the story of the rise and fall of the KPK, in four acts.

Act I: The birth of a new hope, in times of turbulence

After an economic crisis and a series of mass protests that toppled then-president Suharto and his New Order regime in 1998, the Indonesian public demanded that corruption eradication be at the forefront of any successive administration’s goals.

When Suharto’s successor B.J.Habibie rose to power, he began codifying anti-corruption demands to ease tensions with the disenfranchised public. The Consultative People’s Assembly (MPR) unveiled decree (TAP) XI/1998, explicitly condemning his troublesome predecessor and vowed to run an administration free from corruption, collusion, and nepotism. This decree set the normative framework for Law No.28/1999 on State Administration, which is “Clean and Free from Corruption, Collusion, and Nepotism”.

His administration later doubled down on this agenda by passing Law No. 31/1999 on Anti-Corruption, which established the foundations for investigating and prosecuting graft. For more of an in-depth analysis of the bylaws, namely the ubiquitous ‘state losses’ argument, read our previous article on the topic here.

Under Article 43, the Law also obliged the State to create an independent corruption eradication commission within the next two years. This ruling became the legal DNA for an institution like the KPK to exist.

The former aerospace engineer-turned head of state was never able to create this commission after he resigned a year into his tenure due to a lack of internal political support and being hit with, ironically, graft allegations.

His successor, Abdurrahman ‘Gus Dur’ Wahid, was never able to establish an institution either, due in part to his impeachment two years into his tenure. Yet, despite the political turbulence that defined his final days in office, Gus Dur ensured the foundation for a permanent body remained intact. On 5 June 2001, just weeks before his impeachment, he signed and sent Presidential Letter No. R-13/PU/VI/2001 to the House of Representatives to formally introduce the bill that would eventually become the KPK Law.

This legal baton was passed over to his successor, Megawati Sukarnoputri, when she assumed the presidency in 2001. By then, the “two-year deadline” established under Habibie’s Law No. 31/1999 had already passed with no anti-graft institution in place.

In December 2002, her administration passed Law No. 30/2002, which officially established the KPK as an independent government institution. This law granted the commission extraordinary powers that set it apart from any previous anti-corruption body, including:

• Independent wiretapping: The ability to intercept communications without a prior court warrant

• Prosecutorial autonomy: The power to both investigate and prosecute cases, ensuring that graft suspects wouldn’t “disappear” in the handoff between agencies.

• Precedence: The authority to take over corruption cases handled by the police or prosecutors if those investigations were deemed stalled or compromised.

Act II: Glory days of corruption crackdowns

To mention the KPK in present-day Indonesia often evokes a sense of nostalgia for an era where no one, regardless of their political proximity to the presidential palace, seemed “untouchable.” This era of accountability was prevalent throughout Susilo Bambang Yudhyono’s two-term presidency.

In 2009, Aulia Pohan, the former Deputy Governor of Bank Indonesia and the father of SBY’s daughter-in-law, was convicted for his role in the misappropriation of Rp 100 billion from the Indonesian Banking Development Foundation (YPPI), a move that signaled the KPK’s fearlessness to target individuals within president SBY’s extended family.

In 2012, the KPK brought down Miranda Goeltom, former Senior Deputy Governor of Bank Indonesia, who was found guilty of orchestrating the distribution of Rp 24 billion in checks to dozens of House members to secure her selection for the post.

This era of crackdowns also targeted the regional “little kings” who had flourished under post-1998 decentralization. The most prominent of these was Ratu Atut Chosiyah, the once-powerful “Queen of Banten,” after she was caught bribing Constitutional Court Chief Justice Akil Mochtar with Rp 1 billion to swing a local election dispute.

Apart from its eagerness to target high-profile elites, the KPK was equipped with a powerful institutional ability to conduct sting operations, allowing KPK prosecutors to apprehend suspects in the act. Coupled with their ability to wiretap, this power sets them apart from other law enforcement agencies like the Attorney General’s Office (AGO), which is limited to conventional investigative methods and relies on the police to conduct arrests.

Under president Joko ‘Jokowi’ Widodo’s first term, from 2015 to 2019, the KPK, chaired by Agus Rahardjo, recorded all-time highs of over 87 sting operations. This statistic plummeted to 37 operations under chairman Firli Bahuri from 2019 to 2023, after the second Jokowi administration stripped the KPK of its independence.

Prosecutionary powers aside, the KPK’s prestige was so high that it was asked to vet potential cabinet members for Jokowi’s first administration in 2014. Using a “red label/yellow label” system, the anti-graft body screened ministerial candidates, forcing Jokowi to drop several names from his initial list to maintain a clean image of his incoming administration.

Act III: Mass exodus and the downfall of a powerhouse

Who would’ve thought that going after influential elites would have its consequences?

While many would point to 2019 as the year the KPK officially lost its independence into the hands of the central government, attacks against the graft committee had already been underway a decade prior.

Since 2010, the House has actively pushed to revise the KPK Law, with politicians from SBY’s own Democratic Party leading the charge to add the bill into the House’s National Legislation Program (Prolegnas).

These early attempts were largely unsuccessful, primarily because they were met with fierce public resistance and SBY’s own public objections to weakening the agency. Although SBY ended up rejecting any talks of ransacking the agency, he was notoriously wary of the KPK’s growing powers. During a 2009 visit to Kompas Media’s office, he captured this concern bluntly:

“Regarding the KPK, I’m very cautious. Power must not go unchecked. The KPK is already an extraordinary power holder. Its accountability lies solely with God.”

Beyond legislative maneuvers, institutional clashes between the KPK and the National Police (Polri) were commonplace. Police officials publicly criticized what they described as the KPK’s unchecked “superbody” authority to investigate and prosecute anyone it deemed suspicious.

Tensions escalated sharply in 2009 when the KPK investigated Susno Duadji, then-head of Polri’s Criminal Investigation Agency, for misappropriating funds from the 2008 West Java Gubernatorial election. Susno responded with open attacks on the commission, further polarizing public opinion and heating institutional rivalries.

The conflict reached its peak with the criminal prosecution of two KPK leadership officials, Bibit Samad Rianto and Chandra M. Hamzah, by the police on allegations of bribery and abuse of power. Public outrage was overwhelming, culminating in demonstrations and a presidential fact-finding team that ultimately cleared both men of wrongdoing.

The political tide, however, shifted significantly during the transition to the Jokowi administration. The real “fall from grace” arguably began in 2015 when the revision bill finally secured its place in the Prolegnas with virtually no political opposition within the House. Ironically, while the KPK was established under Megawati’s presidency, her Indonesian Democratic Party of Struggle (PDI-P) would go on to become the leading force in revising the law 13 years later.

Although the Law would not be formally ratified for another three years, talks of the bill triggered loud opposition from civil society and a quiet internal collapse, where hundreds of KPK officials left their posts after the bill’s introduction into the Prolegnas.

The final blow arrived in September 2019 with the official passage of Law No. 19/2019. The revision fundamentally altered the DNA of the KPK, transforming its employees into civil servants and establishing a “supervisory board” appointed by the former president. This board was granted the power to approve or deny the independent wiretaps and sting operations that made the KPK so powerful.

In a symbolic yet disheartening homage, protestors laid placards and flowers across the entrance of the KPK headquarters to proclaim the ‘death’ of the KPK.

Saut Sitomorang, then-commissioner of the anti-graft body, resigned in protest of the law’s revision. Two years later, in 2021, dozens of KPK officials were dismissed for “failing” the controversial Civic Awareness Test (TWK), a move widely seen as a mechanism for the central government to sideline outspoken anti-corruption figures. Among those dismissed was prosecutor Novel Baswedan, a widely respected figure who had previously survived an acid attack that left him permanently blind in one eye.

After a decade of attacks, the institutional collapse of the KPK was finally in motion, leaving the central government with greater authority over who and what is allowed to be targeted for graft.

Act IV: Lessons from a fallen giant

Perhaps the days of a feared KPK are now merely fleeting moments of the past. While reinstating the anti-graft body to its former powers remains a sustained demand, its early legal and political foundations can be used as two key lessons for how reform can tackle widespread issues within the system.

#1 When the problem is systemic, you need a radical reform

The KPK proved how bureaucratic norms can be disrupted through shock therapy. After the corrupt New Order, an agency like the KPK was created out of necessity; its bold legal mandates were the product of decades of pent-up public discontent with the government. With mass demonstrations that led to the downfall of the New Order regime still fresh in the minds of the government, they had to come up with an institution that would satisfy the demands of the public to build a cleaner government.

The KPK was then given powers that ensured it could really be effective in its graft crackdowns, and it took full advantage of them and managed to instil fear in less-than-honest officials and politicians. They were so effective in instilling fear that public officials had to spend decades trying to dismantle it altogether.

#2 Public confidence and support are essential

The KPK won the hearts of many not only by virtue of their work and investigating a lot of cases annually, but also by prosecuting a lot of high-profile cases and widely publicized sting operations. In 2019, the KPK was Indonesia’s most trusted public institution. They have unfortunately lost this title in subsequent years. Without this sustained support, their downfall would have occurred way sooner, given how unpopular they were among politicians. Even Jokowi did not dare touch the KPK Law until his re-election was secure with a lot of political capital to burn.

Can we go back to 2018, please?

If President Prabowo Subianto and his administration are genuine about tackling corruption, it needs to move beyond rhetoric and think about revising the institution back to its original 2002 state, galvanizing the institution from its death. This means returning the agency’s full independence and its specific powers, such as autonomous wiretapping and the freedom to conduct sting operations without a supervisor’s green light. Thus making it, once again, a feared and trusted anti-graft institution.

Only then can we hope for a return to real accountability, where no official feels “untouchable” simply because they have the right connections. Without a powerful KPK that is allowed to do its job, any talk of corruption ‘reform’ is only a matter of political window dressing.

How do you view the KPK’s standing in today’s anti-corruption efforts? Comment below!

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Editors: ,

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Prabowo Subianto is a man of ambition. We get it. From the Free Nutritious Meal Program to 80 thousand village cooperatives, the President has been proclaiming sensational numbers that seem too good to be true. Most of the time, it invites skeptical glares. But if there’s a goal we can actually get behind, it would be his proposal to develop 100 gigawatts (GW) of solar energy in the next 10 years—especially if it opens the door for a potentially progressive and inclusive transition towards energy sovereignty.

How ‘big’ is this target, exactly? Given Indonesia’s current 1 GW of installed solar energy, this ambition translates to a 100-fold increase in capacity. Between 2015 and 2024, Indonesia has only been able to increase its capacity from 79 to 942 megawatts (MW). This time around, the plan is to combine a centralized-decentralized approach, with 80 GW dispersed at 1 MW increments throughout 80 thousand villages, and the other 20 GW created through central government control.

Are plans already in place? To date, no official roadmap explains how this will be delivered. In addition, this target coexists with PLN’s 2025–2034 National Electricity Supply Business Plan (RUPTL), which aims for 17.1 GW of solar energy over the next decade—roughly 68% of which is going to extend beyond Prabowo’s first term in office. It remains a question how these two targets will reconcile.

So why are we doing this in the first place? The obvious reason is that this transition is essential to achieve Indonesia’s Net-Zero Emissions target by 2060. But it also makes sense economically: solar technology has reached the lowest production cost in history, making it cheaper than any other source of energy.

The proof? Everyone else has been picking up the pace. Countries like India went from 5.6 GW (2015) to over 135 GW (2025). China, a pioneer of the solar energy boom, increased its solar capacity from 43.5 GW (2015) to over 887 GW (2024). Both countries now top the list of the world’s largest solar energy producers alongside the United States. In Southeast Asia, Vietnam increased its solar energy capacity by 3,733 percent—from a mere 5 MW (2015) to over 18.6 GW (2024).

In this edition of The Reformist, we unpack Indonesia’s energy sector and outline what must change for a solar energy revolution to begin:

1. Stop making coal artificially cheap

Currently, the pricing point of solar-based energy is not yet competitive. Not because it is inherently expensive, but because its main competitor—coal—is kept artificially cheap. The Domestic Market Obligation (DMO) model mandates coal mining companies to sell 25 percent of their production at a capped price of US$70 per ton, much lower than the international standard of US$100 per ton. With rising coal production over the last five years, companies appear more than willing to abide by this as they remain competitive in global markets. Meanwhile, the government is already spending north of Rp200 trillion in electricity subsidies and compensation in 2025 alone.

Yet even as renewables operate under no such advantage, ongoing projects do indicate encouraging signs. The Cirata Floating Solar Power Plant, for example, operates at around US$5.8 cents per kWh, signalling that solar is approaching—if not already reaching—cost competitiveness amid heavy subsidies.

If Indonesia is serious about accelerating solar deployment, its falling production costs should be complemented by demand-side subsidies. India, for instance, offers an effective precedent through its Renewable Consumption Obligation (RCO), which mandates that a growing share of electricity consumption—43 percent by 2030—must come from renewable sources.

2. Tackle the intermittency and distribution problem

While being on the equator, Indonesia is not completely free of the intermittency challenge. Due to long periods of monsoon season, it enjoys a limited amount of sunlight in a year. To get ahead of this, Battery Energy Storage Systems (BESS) should be included in any solar project to store and generate electricity when sunlight is absent. To the administration’s credit, it has promised that for every 1 MW of solar capacity in every village, 4 MW of battery will be installed.

Given Indonesia’s archipelagic nature, another inherent challenge is distribution, especially to remote areas in the outer islands. The government seems to be adamant that 80 of the 100 GW capacity be delivered through 80 thousand village cooperatives because of operational feasibility concerns. These align with the need to plan microgrids, create new demands that do not compete with coal on larger grids, and mitigate the slow pace of coal-fired power plants’ early retirement.

3. Consider the economics of scale

Taking lessons from India and China’s solar booms, capacity expansion is more affordable when driven primarily by centralized large-scale solar projects. In India, around 85.7 of the 135 GW installed solar capacity comes from large-scale grid-connected plants. China goes even further: it hosts more such projects than any other country and, in 2024 alone, added 277 GW of new utility-scale solar capacity.

The argument for scale is an economic one. India’s Bhadla Solar Park operates at $3.7 cents per kWh with a 2 GW capacity and 56-square kilometers plant. The early success of Cirata Floating Solar Park is also similarly enabled by its scale.

Simply put: The larger the solar power plant, the cheaper the costs will be. With scale, Indonesia could potentially achieve a production cost much cheaper than the price cap set under Presidential Regulation No. 112/2022, where solar projects with capacities of up to 1 MW are subject to the highest price ceiling of US$11.47 cents per kWh, while projects exceeding 20 MW are capped at US$6.95 cents per kWh.

4. De-risk private investment, don’t strain the state budget

While village cooperatives are mandated with the development of solar initiatives, there remains no clarity on additional budget allocation, causing more questions on how exactly the government will help fund the initiative. The current scheme revolves around greater involvement of state-owned banks to lend capital into the project and the use of Rp240 trillion in government funds as liabilities for repayment.

State finances aside, this 100 GW dream doesn’t have to come at the expense of straining the state budget. Instead, foreign investment can play a role in realizing this ambition. There is no need for new innovative financing schemes to woo new investors. They will inject capital when risks can be calculated and given the security that their projects won’t incur losses from factors out of their control.

De-risking projects can take the form of clear and enforceable Power Purchase Agreements (PPA), aided land acquisition, streamlined permitting processes, and state-backed guarantees that shield projects from sudden regulatory shifts. Threats from non-state actors should also be accounted for. It shouldn’t be the case that solar farms are subjected to extortion in the same way an electric vehicle manufacturing factory was threatened in Subang, West Java. Eradicating these ‘hidden fees’ will substantially reduce capital expenditure and increase investor confidence.

5. Untangle the wire of state control in the electricity market

PLN is the only utility company that exists in the country and holds complete control over the Indonesian energy sector. This is by design and, from an idealist perspective, for good reason. The state views electricity as an essential commodity and public good, taking the sole responsibility for distributing it to every Indonesian at an affordable price. Across the four functions of generating, transmitting, distributing, and retailing electricity, private companies are only allowed to generate, while the rest is essentially monopolized by PLN.

In an effort to rapidly expand generation capacity, PLN entered into long-term PPAs with independent power producers (IPPs) through a take-or-pay scheme. These IPPs mainly use fossil fuels as their source of energy, and the take-or-pay agreements often range from 10 to 20 years. These contracts guarantee fixed prices and obligate PLN to purchase agreed volumes of electricity regardless of actual demand.

When power demand projections fail to rise to intended levels, PLN is forced to pay for unsold electricity. This is what’s been happening in the past decade: Indonesia suffered from an average oversupply of 33 GW caused by a mismatch in demand projection in 2015. Analysts estimate that for every gigawatt unsold, PLN incurs losses of roughly Rp3 trillion, placing a heavy fiscal burden both on the company and the country. Only recently, in 2025, did the ESDM Ministry reveal that the electricity demand in the island of Java and Bali, which makes up 70 percent of national energy consumption, had caught up with existing supply.

This leaves little incentive for the PLN to create new renewable energy plants. As a result, private parties remain dependent on the willingness of PLN to collaborate, creating a glaring bottleneck for realizing 100 GW worth of new energy.

In comparison, India, Vietnam, and China have implemented varying degrees of energy sector unbundling. In these countries, while the state retains control over transmission networks, private actors are permitted to compete more freely in generation and retail, allowing for greater renewable energy uptake. The results speak for themselves. As a result, these countries were able to capitalize on the 90-percent decrease in solar panel prices in the last decade because they understood the need for structural reform in their electricity sector. One could argue that Indonesia could easily catch up as well if the government is serious about achieving its stated goals.

Power wheeling could be an entry point to generate evidence of impact in reforming the market without immediately dismantling government control of the national energy grid. It allows electricity generators to sell power directly to consumers by paying a fee to use existing national transmission and distribution networks, without requiring the state utility to act as the sole buyer and seller. This provision is pushed for by renewable energy groups to be included in the New and Renewable Energy Bill, which remains stalled in parliament. However, because this act would allow for greater private sector involvement in the distribution of electricity, power wheeling remains contentious as it is seen as a step towards unbundling the electricity sector.

100 GW dream, one step at a time

Our message is that Indonesia’s ambitious solar power revolution is possible with proper planning and commitment to systemic reform. It should be about building the essential infrastructure for energy transition—from pricing distortions, resolving grid bottlenecks, sustaining access to financing, and creating an ecosystem where public and private partnerships can truly thrive. These may look less flashy, but will determine whether the ambitions manifest into reality or remain another pipe dream.

Writer, researcher:

Editors: Ravio Patra, ,

Expert advisors: , Mahawira Dillon, Talitha Dwitiyasih

Graphic designer:

After more than a year in power, President Prabowo Subianto and his current administration enter 2026 carrying unanswered problems of the past while attempting to meet ambitious goals of the future.

In 2025, the government underwent sweeping austerity measures, establishing the country’s sovereign wealth fund, and introduced grand flagship programs; all with the stated goal of laying the foundation for an 8-percent economic growth. However, last year also saw creeping militarization in civic space, opaque lawmaking processes, and blatant abuse of law enforcement powers.

If 2025 was the year of grand introductions, then 2026 will be one of setting precedent and patterns of what is to be expected of this administration in the foreseeable future.

This edition of The Reformist will preview the year ahead as President Prabowo begins his second year in office amid growing concerns of democratic backsliding, lackluster policy management, and escalating geopolitical turmoil—with extra attention on these five issues:

1. What’s next for Prabowo’s ‘grand’ flagship programs

In Prabowo’s second year in office, all eyes will be on the flagship programs he promised during his election campaign; the most notable being the Free Nutritious Meal (Makan Bergizi Gratis, or ‘MBG’). Throughout 2025, the initiative was scrutinized for a variety of reasons, from its lack of oversight, cases of food poisoning, and the involvement of law enforcement in its implementation, which has raised conflict of interests criticisms.

This year, the ‘MBG’ program will drain Rp 335 trillion from the state budget to finance its operations, up from the Rp 71 trillion allocated in its inaugural year. Notably, only around 72 percent of the budget last year was spent, raising further questions on how a fivefold increase will be used, and more importantly, why it is needed for this program.

Prabowo’s 80-thousand Red and White Village Cooperatives (Koperasi Merah Putih) program was also reworked late last year to ramp up its operations going into 2026. Through Presidential Regulation No. 17/2025, the Finance Ministry redirected village funds (Dana Desa), sourced directly from the state budget, toward financing cooperative infrastructure through state-owned banks.

In total, up to Rp 240 trillion in village funds will be used to build warehouses, retail outlets, and supporting facilities, with local governments required to repay around Rp 40 trillion annually over six years. Each cooperative is eligible for a bank loan of up to Rp 3 billion, allocated for both physical construction and operational costs, while state-owned PT Agrinas Pangan, alongside the Indonesian military, has been tasked with accelerating construction to make up for limited technical capacity.

Lastly, food security (‘food estate’) will take center stage this year as the Prabowo administration pledged to expand agricultural production in land-rich Papua. Environmental groups warn that this approach risks accelerating deforestation and ecological collapse. Greenpeace estimated that up to 2.4 million hectares of natural forests, wetlands, and savannas could be affected.

As of October 2025, land clearing for these projects had already reached around 36 thousand hectares, with nearly 20 thousand hectares classified as deforestation. Human rights violations over the forced displacement of indigenous Papuans will also continue to rise as more land is cleared for this program.

2. Electoral politics and democratic backsliding: Welcome back, New Order?

Indirect local elections have made headlines early in the year as President Prabowo and his government coalition continue to spearhead the plan for governors, mayors, and regents to no longer be directly voted by the public but instead by the Regional House of Representatives (‘DPRD’).

According to Prabowo’s coalition, this move would substantially lower the cost of politics, allowing fairer competition in Indonesia’s democracy. They further contend that these local leaders, as part of the executive branch, function primarily as extensions of the central government.

These claims, however, are widely challenged as a superficial response to money politics while masking hidden intentions. By restricting voter choice of locally elected leaders, power becomes even more centralized as political party elites gain greater political ground to lobby amongst themselves on who gets to govern a region. This reality further distances citizens from the democratic process and politicians from accountability.

The current administration has now garnered support from all but two political parties in the House of Representatives (‘DPR’), namely coalition-mate Prosperous Justice Party (‘PKS’) and quasi-opposition Indonesian Democratic Party of Struggle (‘PDI-P’). However, as the President consolidates more of his power politically, this year might just be the moment he attempts to realize this ambition.

Additionally, while elites in the administration have only called for indirect elections at the local level, Prabowo and his Gerindra party have long advocated for the reinstatement of the original 1945 Constitution to replace the current amended Constitution, which among other things would erase direct presidential elections. This isn’t just hearsay, it is explicitly written in Article 10 of the party’s bylaws.

Under the original Constitution, direct presidential elections would cease to exist as the Consultative People’s Assembly (‘MPR’) would have the authority to select the country’s President, reverting the process to how it was done throughout the New Order regime.

The signs of democratic backsliding are there, and if left unchecked, Indonesia risks a return to authoritarianism.

3. Energy transition: Big ambition, but what of the execution?

Indonesia’s energy transition narrative continues to clash with policy reality. Last year in Brazil, President Prabowo publicly pledged that Indonesia would source 100 percent of its energy from renewable sources in the next ten years. In front of the United Nations’ General Assembly, he affirmed Indonesia’s commitment to Net Zero Emissions by 2060.

Domestically, he has also promised an ambitious goal of creating 100 gigawatts (GW) of solar energy capacity. While this promise is good on paper, a roadmap on how this will be done does not yet exist. At present, Indonesia has less than 1 GW of solar capacity in its energy mix.

The initiative will delegate 80 GW to be created through village cooperatives, whereas the other 20 GW will be managed by the central government. Without addressing concerns of scale, technical capacity, good governance, and proper financing models, this solar power dream risks becoming another one of the President’s grand yet lackluster ambitions.

Grand ambitions aside, the 2025–2034 Electricity Procurement Business Plan (RUPTL) is also set to schedule new coal-fired power plants, even though Presidential Regulation No. 112/2022 formally bans the construction of new coal facilities. Talks of revising this regulation to allow coal plants under the pretext of ‘energy sovereignty’ have led to public backlash as a step back towards meaningful decarbonization, especially since the current text already permits captive coal power plants for industrial use.

Meanwhile, Indonesia’s sovereign wealth fund, Danantara, has announced plans for geothermal and waste-to-energy power plants, whose “renewable” classifications are often challenged by experts and advocates. While these investments allow the government to signal progress on clean energy, they do little to dispel concerns that Indonesia’s transition strategy continues to rely on grey-area solutions rather than a decisive step towards investing in proven clean energy.

4. With a collapsing international order, where does Indonesia stand?

Last year was marked by further signs of a decaying rules-based international order. A multipolar world built on the foundations of international law and collaboration has been undermined in favor of arrogance from global powers. The United States, under President Donald Trump, resumed an aggressive unilateral foreign policy that included withdrawing from longstanding agreements and deepening skepticism about collective approaches to global challenges.

Geopolitical tensions continue to evolve, including deepening conflicts between China and Taiwan, border disputes and military aggression among ASEAN member states, and the lack of a real solution for Israel’s ongoing genocide in Palestine.

Indonesia, as a middle power, could stand as a key actor in this changing geopolitical structure—one shaped by the advocacy of international law. Yet, while President Prabowo publicly boasts a ‘free and active’ foreign policy motto, Indonesia’s current diplomatic model appears pragmatic at best and unprincipled at worst. These stand in stark contrast as Indonesia assumes the Presidency of the UN Human Rights Council for 2026.

Last year, President Prabowo showed this by applying for Indonesia’s membership into BRICS, while still finding ways to cozy up with US President Donald Trump. His administration also broke a decade-long deadlock by securing an economic partnership agreement with the European Union, even as it pursued deeper security and defense cooperation with countries like Türkiye and China.

Entering 2026, this unprincipled approach sees no signs of slowing down. On 3 January, after the US launched a unilateral military attack on Venezuela, capturing President Nicolás Maduro and First Lady Cilia Flores into US captivity, foreign leaders across the Global South and middle powers were quick to condemn Washington’s actions. Indonesia, however, chose to remain neutral, with the Foreign Ministry expressing ‘grave concern’ without explicitly mentioning the US or Donald Trump as aggressors. President Prabowo himself has yet to issue an official statement on the incident.

This approach is far from accidental. With unfinished tariff negotiations between the US and Indonesia, explicitly condemning the US now goes against the trust the President is actively cultivating with his American counterpart.

Indonesia’s foreign policy has thus evolved into one that subordinates the enforcement of international law to the pursuit of narrowly defined national interests. Keeping up this balancing act, however, will only become more difficult as the world becomes more polarized under a dysfunctional international order.

5. Corruption eradication effort, politicized?

Debates over what constitutes corruption came into focus last year after a series of high-profile graft cases. From adulterated gasoline sold at inflated prices, ‘illegal’ sugar import policies, to the purchase of old naval fleets, corruption continues to dominate Indonesia’s news cycle.

In many of these cases, prosecutors centered their allegations on the notion of ‘state losses’, as stated in Articles 2 and 3 of Law No. 20/2001 on Anti–Corruption. The argument was used to justify indictment even in the absence of clear paper trails or evidence that the suspects benefited personally. (We wrote in-depth about the contested articles last year in this piece)

This was exactly what happened in the highly politicized graft case against former trade minister Tom Lembong. The trial almost ended with Tom being sent to prison for four and a half years, until President Prabowo intervened at the last minute to provide legal clemency to the former trade minister.

Utilizing anti-corruption law to criminalize policy and business decisions undermine the ultimate goal of addressing theft and large-scale embezzlement more detrimental to the economy.

Yet, the same ‘state losses’ argument continues to be used as former education minister Nadiem Makarim currently sits on trial for the Rp 2.1 trillion Google Chromebook procurement graft case. Nadiem and his legal team have rejected these claims, arguing that there was no personal enrichment. Google representatives have also denied involvement in any quid pro quo arrangements between the tech giant and the former minister.

While Nadiem’s tenure as education minister is viewed in a controversial light due to his ‘out of touch’ approach in reforming the country’s education system, the graft case itself reeks of foul play. In 2026, attention will remain on whether the Corruption Eradication Committee (KPK) and the Attorney General’s Office will tackle genuine corruption cases, or if they will continue getting dragged into high-profile, politicized cases.

Buckling up for 2026

This next year will not be easy or smooth sailing. As the current administration continues to push out new and controversial policies, it is important that civil society remains as a vanguard of political accountability to ruling elites.

Empathetic solutions exist if those in power choose to wield their political power in a just manner. Achieving policy continuation does not have to come at the cost of authoritarianism and nor does economic growth have to come at the expense of environmental degradation or human rights violations.

If you are interested in watching Indonesia’s 2026 under Prabowo’s second year in office with us, The Reformist is opening up more spots this year for our readers to contribute to our opinion column. Write to us: connect@thinkpolicy.id

Writer, Researcher:

Editors: , , Ravio Patra

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Dear readers,

What an eventful year 2025 has been. On behalf of The Reformist editorial desk, we would like to thank our readers for navigating this tumultuous first year of the new administration with us.

This year, The Reformist published 15 volumes from our editorial room and 15 opinion pieces sent to us from guest writers. Looking back, these writings are markers of what the nation withstood throughout the year, in one way or another.

What we wrote

Turbulent times call for structural reforms

Indonesia has been through strong turbulence this year. Demonstrations came in waves, protesting one thing after the other: from costly programs that angered taxpayers to the government’s inability to respond aptly to a crisis.

In March, The Reformist wrote about President Prabowo Subianto’s campaign centrepiece, the Free Meal Program, a.k.a ‘MBG’. The program’s rollout, launched in January, sparked controversy after the government cut approximately Rp 300 trillion from critical budgets in an ‘austerity’ measure, reportedly to fund MBG. We asked in our article: Is MBG worth the hefty budget cuts?

Then comes August, when a series of protests broke out in the capital and other regions when the people’s economic struggles were met with elite arrogance instead of empathy. Public anger reached a boiling point after a police tactical vehicle ran over and killed a young ojol (online ride-hailing) driver, Affan Kurniawan. We wrote about the prevalence of police brutality in times of protests and the impunity that followed, calling for fundamental police reforms.

A few weeks ago, an unlikely cyclone ‘Senyar’ formed near the equator and wreaked havoc in three provinces of Sumatra, causing flash floods and landslides that killed thousands and displaced millions. In our November volume, we wrote about what the government must do about the Sumatra tragedy.

On past reforms

Throughout the year, we reflected on notable past reforms such as the country’s universal health coverage BPJS, the New Order-era school expansion program ‘SD Inpres’, the capital’s public transportation breakthrough ‘Transjakarta’, and the beloved digital payment system ‘QRIS’.

With all their merits and shortcomings, we sought to find lessons about what made them work (and what didn’t) as structural reforms. Hopefully, you also learned a thing or two about how reform can be done inside an established system.

The reform hits and misses

When a window of opportunity opens, it gives way for substantial reform to take place. At The Reformist, we identified instances when reforms either could (or should) happen, or when they did happen but missed some marks.

On education, we questioned in this volume the efficacy of decentralized autonomy and whether or not we missed the opportunity to address disparity in quality education.

Speaking of opportunities: In this article, we looked back to the 1998 financial crisis—interrogating the IMF bailout that, while many saw it as ‘selling our soul to the devil’, might have provided us a push for institutional reforms in our banking system.

More recently, we wrote about a possible great reform that could change the public policy sphere: several experts and scholars are petitioning the Constitutional Court (MK) to review provisions in the corruption law that have deterred policymakers from initiating groundbreaking reforms, fearing criminalization.

In our last volume of the year, we reviewed Indonesia’s participation in the COP30 climate conference, which has tested our commitment to meaningful climate action. This was an opportunity for Prabowo’s administration to prove its seriousness in achieving our climate targets, but a few things have gone in the other direction.

Welcoming our guest writers to The Reformist Opinion

We realize our readers aren’t just observers; they are practitioners and experts shaping the fields they work in. To tap into this collective intelligence, we opened our pages to guest contributors, turning The Reformist into a collaborative forum for policy debates. We published 13 The Reformist Opinion pieces this year, including:

• When sugar imports become a crime: Putting trade policy on trial, by Vid Adrison and Meuti Mohsin

• Danantara’s expensive waste-to-energy plan won’t solve any problems by Donny Julius

• Prabowo’s self-fulfilling disaster relief plan, patriotic or biased? by Alanda Kariza

• More on our page

We thank our contributing writers for their enthusiasm and trust in our publication. In 2026, we will open more spots for guest writers to publish their articles in The Reformist. We really hope more of you would like to share your thoughts with fellow readers.

Read our terms and conditions before sending your pitch on this page.

We started a podcast!

2025 is also the year The Reformist ventured into a new medium, podcasts! In our inaugural year, we had seven meaningful conversations with guests from around the world. From senior Indonesian technocrats to neighboring countries’ young reformists, we created our Reformist podcast to bring you all closer to the necessary policy, political, and historical dialogues needed for structural change.

We talked to former Energy and Resources Minister Sudirman Said about the reforms to dismantle the oil and gas ‘mafia’. In another episode, we revisited the post-2004 tsunami reconstruction efforts in Aceh and Nias with William Sabandar (this particular episode is now more relevant than ever as we witness the government’s lackluster Sumatra disaster management efforts).

Other episodes include:

• On President’s delivery unit with Yanuar Nugroho

• On Jakarta’s digital service reform with Atika Nur Rahmania

Then, we went international.

We had Thailand’s (almost) Prime Minister Pita Limjaroenrat talk about what it takes for the idealist youth to build and sustain a political movement. We spoke with Belgian historian and author of Revolusi David Van Reybrouck, who shared the human stories behind Indonesia’s independence movement. We also gathered insights from Malaysia’s up-and-coming reformist politician and founder of the MUDA political party, Amira Aisya.

We are looking forward to more conversations about reforms and policy issues next year!

The Reformist in 2026

2025 has been a defining year for The Reformist.

As this year comes to a close, we would like to express our gratitude to all of you for reading, watching, and listening to our work throughout 2025.

In 2026, we are establishing “The Reformist” as the brand for all media released by Think Policy. We will continue to grow and, hopefully, be your sanctuary when you need a break from the overstimulating, bottomless short-form content ‘feed’.

Starting next year, you can expect more regular release of our long-form media:

• The Reformist Insights: A weekly newsletter from our editorial desk; an analysis, editorial view, or resume of past, current, and possibly interesting policy reforms.

• The Reformist Opinion: A weekly opinion column for guest writers—experts, observers, practitioners, students, you—to publish their pieces in our publication.

• The Reformist Podcast: A monthly conversation with reformist figures in and outside of the system—from home and abroad.

We are excited for the year ahead and looking forward to your continued support in 2026!

See you next year,

The Reformist Editorial Team

The recent flood catastrophe in Sumatra is a direct consequence of the ongoing climate crisis. While the death toll keeps increasing and conditions in Aceh, West, and North Sumatra are far from being restored, the government’s response to necessary mitigation and adaptation efforts in the past decade has also been lukewarm at best. In many ways, the country has been misguided in reducing its economic dependence on environmentally damaging sectors.

Evidently, at the United Nations’ (UN) 30th Conference of the Parties (COP) climate summit in Belém, Brazil, Indonesia came not to cooperate in rooting out carbon emissions but to advertise itself as a ‘green’ investment partner to legitimize them.

As a platform meant to keep the world from exceeding a limit of 1.5°C temperature increase—to prevent catastrophic and irreversible damage—COP has failed to deliver this goal even after 30 iterations, warned the UN Environment Programme. Instead, COP offers us insight into the perils of collective action and raises a question of whether the international community needs a different approach altogether in achieving the indispensable mission to stabilize the Earth’s temperature.

In this edition of The Reformist, read along to a summary of what transpired over COP30 and Indonesia’s hodgepodge climate commitments under President Prabowo Subianto’s administration.

From Rio to Belém: 30+ years of climate diplomacy ended up in avoidant leadership

It was in Rio de Janeiro in 1992 where the United Nations Framework Convention on Climate Change (UNFCCC) was born, the treaty that would give rise to these annual gatherings and spark three decades of climate negotiations.

COP30 arrived at a critical juncture where COP21’s binding Paris Agreement is at risk of falling through. Under this accord, signed in 2015 by 196 countries, signatory nations agreed to limit the Earth’s temperature rise to well below 2°C above pre-industrial levels, with efforts to limit the increase to 1.5°C.

To achieve this goal, each country must submit a Nationally Determined Contribution (NDC), a climate action plan outlining its emissions reduction targets and strategies by 2030. COP30 marked a pivotal moment as it was the deadline for countries to submit their updated commitments post-2030, referred to as the Second NDC.

Before COP30 in Belém, countries were meant to submit their post-2030 climate NDCs by 10 February 2025. About 13 out of 194 participating countries met this deadline, with 103 more countries turning theirs in by the end of COP 30, including Indonesia.

Beyond the formal commitments, however, Belém found itself tangled with avoidant leadership.

I. The fossil fuel phase-out avoidance

While countries like the Netherlands and Colombia were steadfast in pushing for the creation of a national roadmap for phasing out fossil fuels, their proposal never made it into the final COP30 accord. The support from over 80 countries (including host Brazil) was lost to the majority of participating nations, including Indonesia, that refused to commit to language that would legally bind them to a fossil fuel phaseout.

Domestically, President Prabowo’s ambitions of realizing energy sovereignty and 8 percent economic growth drew fears about whether sustainability and a green transition were even possible. While the President pledged to reach Net Zero Emissions before 2050 and the complete phase out of non-renewable power plants in the next 15 years at the G20 Summit in Rio last year, his administration’s domestic policies yield significant doubts.

It began when Energy and Mineral Resources Minister Bahlil Lahadalia released the 2025-2034 Electricity Procurement Business Plan (RUPTL), a document that sets out how the state-owned electrical company (PLN) will source and expand the country’s power supply over the next decade.

Despite Presidential Regulation No. 112/2022 banning new coal-fired power plants from being built after 2030, the new RUPTL circumvented this regulation by reinstating plans for additional coal and gas capacity throughout the decade. Of the 69.5 gigawatts (GW) of new energy planned, 16.6 GW will come from non-renewables, including new coal units, 42.5 GW is slated for renewables, and 10.3 GW from energy storage. The plan, however, front-loads fossil fuel development from 2025 to 2029, delaying the bulk of renewable additions until 2030–2034, only after Prabowo finishes his term as President.

Yet, a month later, in a state visit to Brazil, the President confidently affirmed in front of an international audience that in ten years, the nation would be completely supplied with electricity from renewable energy. Things are just not adding up.

II. The financing avoidance

The ‘Baku-to-Belém Roadmap Report for US$1.3 Trillion’ was a key talking point, outlining an ambition to mobilize that amount annually by 2035 for climate action in developing countries.

The roadmap provides five mechanisms: replenishing (grants and concessional finance), rebalancing (debt and fiscal space), rechanneling (private finance), revamping (capacity and coordination), and reshaping (systems and structures for equitable capital flows). Under this framework, funds can be mobilised through both public and private sources, encompassing foreign aid, private investment, and international financial institutions.

However, while participating countries endorsed the plan, geopolitical squabbles have dimmed its projected efficacy. Developing countries, such as China and India, argue that developed countries must shoulder a clearer and larger share of responsibility, in line with Article 9(1) of the Paris Agreement. They argue that the roadmap places excessive reliance on mobilising private finance, which shifts pressure away from public funding from developed countries.

In contrast, richer countries such as Canada advocate for a broader approach that leans more heavily on private investment and innovative financial instruments to meet the US$1.3 trillion aspiration.

Another climate-finance pledge introduced at COP30 is the Tropical Forest Forever Facility (TFFF). The facility was launched as an innovative financing model to support the conservation and protection of tropical forest ecosystems through performance-based payments and blended financing mechanisms.

While the initiative has been widely welcomed, the commitments made so far fall short of the TFFF’s target of US$125 billion. Indonesia, Brazil, and Portugal affirmed their intention to contribute US$1 billion each, but developed countries such as Norway, France, and Germany have announced varying contribution levels or have yet to determine their commitments.

III. The enforcement avoidance

The crux of the problem lies in the Paris Agreement’s structure. While it is legally binding in terms of participation and reporting, its climate targets are entirely self-determined. This flexibility was designed to secure universal participation, but it also means that national ambition is deeply vulnerable to domestic politics, as demonstrated by the United States, which has withdrawn from and re-entered the agreement depending on who occupies the White House.

A contrast can be seen in the Kyoto Protocol. Adopted at COP3 in 1997, it was the world’s first attempt at a legally binding, top-down climate action protocol. Kyoto assigned emissions-reduction targets only to developed nations under the principle of “common but differentiated responsibilities.” On paper, this created a clearer plan than Paris. In practice, however, it proved politically unworkable.

One of the obstacles was the reluctance of developed nations, particularly the United States, to bind themselves to legally binding climate commitments when countries such as India and China were not subject to the same obligations.

Indonesia’s climate pledges and their dependencies

Indonesia submitted its Second Nationally Determined Contribution (SNDC) on October 27, two weeks before the start of COP30. The country’s last submitted commitment was through its Enhanced NDC in 2022. The new SNDC marks an unambiguous outlook into Indonesia’s climate commitments, with a few notes.

First, the SNDC’s projected 19 to 23 percent renewables share within the country’s energy mix by 2030 is far below the President’s 100 percent ambition in 2035. It also pledges an 8 to 17,5 percent emission reduction in Indonesia’s total greenhouse gas (GHG) emissions across all sectors, including Forestry and other Land-Use (FOLU) and non-CO₂ gases, compared with the previous NDC.

Under the new SNDC, Indonesia also aims to peak its GHG emissions in 2030 at 1.35 gigatons of carbon dioxide equivalent (CO₂e) in the low-economic-growth scenario and 1.49 gigatons of CO₂e in the high-economic-growth scenario.

Critics, however, point to the SNDC’s overreliance on reducing emissions through the FOLU sector. While the government claims the sector will reach a “FOLU Net Sink” by 2030—meaning land use will absorb more carbon than it emits—relying on FOLU-based emission cuts allows the government greater leeway to justify continued fossil-fuel usage, as reflected in the RUPTL.

Even then, at the lower peak, Climate Action Tracker warned that if every country were to follow Indonesia’s climate plan, the world would overshoot the 2°C limit and instead surpass 4°C. According to their analysis, Indonesia has to decrease its peak to as low as 0,72 gigatons of CO₂e by 2035, outside of the government’s FOLU net sink pledge.

While the outcome is filled with question marks, the administration’s methods of getting there also present glaring dependencies:

I. The carbon-trading dependence

Instead of tightening pathways to reduce fossil fuel emissions, the Prabowo administration has opted to double down on carbon trading. This turn toward commercialization was formalized through Presidential Regulation No. 110/2025, which establishes Indonesia’s national carbon-market architecture and places nature-based conservation solutions at the center of its climate strategy.

Under this Presidential Regulation, trading carbon emissions became the ‘selling point’ of Indonesia’s time at COP30. The market-based mechanism allows domestic and international companies to offset their emissions by purchasing carbon credits or paying a carbon tax, rather than reducing their reliance on fossil fuels.

While the system presents a mutually beneficial solution by offering additional revenue for the state and a compliance pathway for emitters, it is also the least disruptive option for Indonesia’s fossil-fuel industry.

The delegation carrying this agenda reflected these priorities. Prabowo appointed his brother and climate envoy, Hashim Djojohadikusumo, to lead the Indonesian team at COP30. Notably, Hashim has had a longstanding business career in the mining and extraction industry through his Arsari Group conglomerate.

He was joined by Forestry Minister Raja Juli Antoni and Environment Minister Hanif Faisol Nurofiq, who publicly stated that Indonesia was prepared to “sell a large portion” of its carbon emissions on the international market.

Even before setting foot in Bélem, the Indonesian delegation had set an internal target of selling over Rp 16 trillion (≈US$1 billion) worth of carbon credits. They ended up coming home with Rp 7 trillion in sales.

Carbon trading, however, has faced criticism and doubt from civil society groups on whether it can create real emissions reductions. By trading carbon emissions, rich countries can continue their business-as-usual operations and not have to reduce their own emissions by simply offsetting them through the purchase of carbon credits abroad.

Once traded, monitoring the results tends to become a castaway. A 2023 study showed that over 90 percent of issued carbon credits from 26 global forest conservation projects were either overcounted or unable to produce real emissions cuts. Environmentalists also note growing concerns over Indonesia’s conservation pledges amid growing peat degradation and deforestation. The tragedy in Sumatra–which was largely attributed to mass deforestation and rising oil palm plantations– certainly doesn’t help in shaping Indonesia’s legitimacy.

II. The fossil fuel dependence

This year, the Indonesian delegation was awarded the ‘Fossil of the Day’ title by activists at COP30. Their criticism centered on Indonesia’s inclusion of 46 fossil-fuel lobbyists and the delegation’s decision to use the conference to market carbon credits as a way to legitimize emissions at the same summit where negotiators were convening to eliminate them. Companies such as state-owned Pertamina, Golden Energy Mines, Adaro Energy, MedCo Energy, Vale Indonesia, and many more are listed as the official sponsors of this year’s Indonesian delegation.

Indeed, for years, lobbyists from the fossil fuel corporations have been given access to mingle with world leaders at the meeting that seeks to phase out the industry. Historically, the rising emergence of fossil fuel lobbyists began at COP26, five years after the Paris Agreement. The Guardian reported that from COP26 to COP29, over 5,000 fossil fuel lobbyists were present in COP summits. In COP30 alone, over 1,600 fossil fuel lobbyists participated in the event.

III. A global north dependence?

The truth is that climate financing has always been fraught, as seen through the Baku-to-Belem roadmap. Since COP1 in Berlin, the global fight against climate change has relied on one fragile premise: that wealthy, industrialized nations would help developing countries in their climate action through either financial aid or technical transfer of knowledge. The former has always been the hardest to materialize.

Speaking of climate financing, the current administration has bold energy transition ambitions that have raised concerns over its unclear sources of funding. A few months back, the government introduced a new ambitious pledge to build 80 GW of solar energy projects in rural villages. For context, Indonesia has yet to reach 1 GW of solar energy in its energy mix. This responsibility will now fall on the 80 thousand village cooperatives created through the President’s flagship Red and White Village Cooperatives program.

The theatrics of climate financing deserve a separate article in itself, which is why we will be extending this article into a two-part series on climate change. For our next edition in January, The Reformist will take a closer look at the nuances of climate financing and just how ambitious, and perhaps unrealistic, this solar energy plan really is.

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Cyclones don’t usually form near the equator, but an anomaly birthed tropical cyclone ‘Senyar’ that has triggered a series of deadly floods across Southeast Asia. The human death toll is staggering: as of 2 December 2025, nearly 1,000 deaths have been reported—708 in Indonesia, 181 in Thailand, 98 in Vietnam, and three in Malaysia; while hundreds remain missing and over one million displaced.

Based on the death toll alone, Senyar seems to have hit Indonesia the hardest, wreaking havoc on three major provinces: Aceh, North Sumatra, and West Sumatra. Sustained heavy rains, flash floods, and landslides wiped out entire villages, destroyed homes, and crippled infrastructure. The severe damage was intensified by widespread deforestation, which has removed the natural barriers that might have absorbed the rainfall before reaching populated areas.

The scale of devastation raises urgent questions about preparedness, response capacity, and ecological health. More could—and should—have been done to reduce risks, strengthen resilience, and prevent the loss of so many lives.

Today, 3 December 2025, at 13:00 Western Indonesia Time, President Prabowo will hold a press conference at the presidential palace to address the nation on this tragedy. In this edition of The Reformist, we list five key reforms that the government can and must do, from emergency relief to fundamental reforms:

1. Declare a state of national emergency

The very first order of business should be for the President to declare a state of national emergency.

Unlike Thailand’s swift response in declaring a state of emergency, Indonesia has been painfully slow at addressing the crisis. Prime Minister Anutin Charnvirakul was visibly remorseful for his government’s failure in preventing casualties and underscoring the urgency of the crisis.

Although the floods began on 25 November, it was not until 30 November that the central government initiated a coordinated response. The Head of National Disaster Management Agency (BNPB) Suharyanto admitted that he was “surprised” to see the scale of the disaster, having previously said it was not “as bad as social media made it seem.”

Some local governments have also raised white flags, declaring themselves overwhelmed amid limited capacity, budget, and their own families having been impacted by the flooding. This should have been enough to compel the central government to step in.

Yet, President Prabowo Subianto publicly stated that conditions on the ground were already improving and there wasn’t an urgent need to declare a state of emergency. After all, this disaster has already met the threshold of a “national disaster” per Law No. 24/2007: massive casualties, areas of impact, destruction of infrastructure, and economic losses across multiple provinces.

But it’s not too late: the central government can still right the wrongs of their slow early response by allocating the full capacity of the state to ensure no further casualties and provide urgent shelter, food, and relief.

2. Plan promptly to recover and reconstruct impacted areas

As relief efforts continue, the government must immediately begin planning for what comes after the waters recede. In an emotional presser, Aceh Governor Muzakir Manaf held back tears after noting that four entire villages were obliterated by the floods. In places where homes, schools, health centers, markets, and basic infrastructure used to stand, there are now only trails of thick mud. In total, more than 3.2 million people were affected, with 2,600 injured and at least 507 remaining missing.

If the political will is there, a lot can be done to recover from such devastation. There are past instances to learn from:

• Following the 2018 Central Sulawesi tsunami, then-president Joko Widodo issued Presidential Instruction No. 10 of 2018 within two months. The instruction laid out a coordinated rehabilitation and reconstruction roadmap involving multiple ministries and local governments. The swift decision helped reconstruct 2,952 houses in Palu, 1,238 in Sigi, and 1,396 in Donggala; rebuild the Pantoloan and Wani international ports; and reopen hospitals, universities, roads, and bridges.

• After the 2004 Aceh tsunami, the SBY administration established the Aceh-Nias Rehabilitation and Reconstruction Agency (BRR) with special authority, budget, and coordination power to rebuild from the ground up within three months, led by seasoned technocrat Kuntoro Mangkusobroto. BRR mapped the full extent of the damages and rebuilt over 140,000 houses, 3,700 kilometers of roads, 1,700 schools, 1,000 government buildings, and 36 airports and seaports in collaboration with international donors and aid projects. (Watch our conversation with then-Head of BRR Nias William Sabandar)

The government must ensure the rapid plan also encompasses not only physical reconstruction, but also comprehensive social and human recovery, including: psychosocial support (trauma healing), livelihood restoration, and guaranteed access to education for all victims.

3. Invest more in disaster prevention, mitigation, and resilience

If this disaster does not give the government a wake-up call to invest and allocate more budget to managing disasters, nothing will.

Earlier this year, President Prabowo’s austerity measures hit Indonesia’s disaster response and early warning capacities hard. Funding had been slashed for BNPB, the National Search and Rescue Agency (Basarnas), and the Meteorology, Climatology, and Geophysics Agency (BMKG), even as disaster risks escalated.

According to 2026 budget data, BNPB’s allocation will drop from this year’s Rp 1.43 trillion to just Rp 491 billion (-65%). Previously, Basarnas already saw a sharp fall in its emergency response budget from Rp 995.5 billion in 2024 to Rp 410.7 billion in 2025 (-59%). Similarly, BMKG’s budget was cut from Rp 3.114 trillion in 2024 to Rp 2.5 trillion in 2025 (-20%).

One researcher from the National Research and Innovation Agency (BRIN) has also questioned the government’s seriousness in natural disaster prevention, noting that the agency had already developed the early mid-term seasonal study of the Indonesian region (Kamajaya), a forecast system used to anticipate shifts in rainfall and extreme weather patterns to detect tropical cyclones months before their emergence.

In contrast to Indonesia’s budget cuts, neighboring Malaysia has instead pledged to increase its natural disaster prevention system by allocating RM 2.2 billion (approximately Rp 7.1 trillion) in 2026. The funds will be used to finance 43 flood mitigation projects, with 12 of them being new initiatives.

Reassessing the funding for Indonesia’s agencies shouldn’t involve comparing with neighboring countries. Indonesia is a tropical, archipelagic nation sitting dead center in the ring of fire, making the occurrence of environmental disasters inevitable, especially with the worsening climate crisis.

4. Halt new forest concessions and undo deforestation

Indonesia, including the island of Sumatra, has lost so much of its natural buffers and forest cover to rampant deforestation. President Prabowo must take urgent steps to end this and restore the much-needed natural defense system across Indonesia’s disaster-prone regions.

According to Greenpeace Indonesia, river basins across Aceh, North Sumatra, and West Sumatra are naturally narrow, steep, and deep, which give them little capacity to absorb overflow. Under these conditions, forest cover becomes the only buffer that can slow the movement of water. When rain hammers a healthy forest, the canopy breaks the fall, and the roots hold the earth. Conversely, without such canopies or roots, landslides and floods are almost a certainty.

This was evident as we watched the devastating videos of villages in North Sumatra being swallowed alive as stripped hillsides crumbled under heavy rainfall.

Decades of unfiltered extractive activities have depleted our forest cover, practically removing our natural ‘brakes’. The landslides and collapses we witnessed are not freak accidents of nature; they are the outcomes of policies that have allowed destructive industries to operate unchecked. Greenpeace estimates that less than 25 percent of forest cover remains in the three affected regions.

To this end, the government must immediately impose a moratorium on licensing in ecologically threatened areas and disaster-prone zones, reassess existing environmental and social impact assessments, and firmly revoke permits of companies that fail to comply with environmental sustainability requirements.

On the heels of Presidential Regulation No. 110/2025, which officially established the foundations of Indonesia’s carbon market, Indonesia’s delegation secured over Rp 7 trillion in carbon credits during the COP30 climate summit. The funds received from these credits must be earmarked for the protection and betterment of the country’s environment. It should not, by any means, be redirected to “greenwashing” projects that set us on a path of more tragedies.

5. Rethink how the environment and natural resources are managed

The government has to review and ensure adequate regulatory measures against land conversions for purposes of logging, oil palm plantations, mining, and other extractive industries.

Beyond issuing a moratorium, the government must rethink the existing legal and regulatory frameworks that govern land conversion, extractive industries, forest management, and spatial planning.

These include, but are not limited to:

• Government Regulation (PP) No. 23/2021 concerning Forest Areas (a derivative of the Job Creation Omnibus Law), which often facilitates large-scale land clearing through mechanisms such as “forest area release” and “forest area use approval” that disproportionately favor investment over conservation.

• Spatial Planning (RTRW) regulations under the Ministry of Agrarian Affairs (ATR/BPN) that govern “areas for other purposes” (APL) or natural forests that are not classified as forest estates. These regulations only loosely govern APL, leaving them vulnerable to conversion without the strict protections afforded to conservation areas.

• Environmental Impact Assessment (Amdal) processes, which are a pre-requisite for all extractive activities, must be rigorously and transparently enforced. What we have witnessed in Sumatra this past week is the consequence of weak environmental impact assessment—a failure that has left many more vulnerable to disasters that could have been better mitigated.

Protecting the environment means saving lives now

This is not the first time that we have found ourselves in this situation. We have mourned preventable deaths before. We have rebuilt cities from rubble before. And we have shown the world that when leadership responds appropriately to crises, Indonesia can rise stronger than before.

We cannot afford treating the environment and climate change as afterthoughts anymore. Evidently, the choice is no longer between development today versus saving the planet tomorrow. Environmental degradation and climate change are already affecting our lives today, and the cost of ignoring it is too high of a price to pay. For that, we must act now.

Whether through reforestation programs, stringent environmental requirements for extractive companies, or restricting land use permits, our government bears the responsibility to lead Indonesia with the climate problem in mind at all times. Not out of external pressure or international standing, but for the protection, safety, and livelihoods of all Indonesians.

The victims in this disastrous episode deserve more than just our sympathy: they—we—deserve change.

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In 2011, the World Bank’s Global Financial Inclusion Index revealed that only 20 percent of Indonesian adults owned a bank account. Fast forward to 2025, the figure almost tripled by reaching close to 60 percent of the total adult population. The biggest contributing factor to this sharp increase? The growing digitalization of the country’s financial system.

While there is still much to be done, the goal of promoting financial inclusion can largely be attributed to the adoption of mobile banking and financial technology (fintech) systems, which allow a greater proportion of the population from diverse socio-economic backgrounds to participate in the formal economy.

The reform that best represents this change is the nation’s beloved Quick Response Code Indonesia Standard (QRIS), introduced by Bank Indonesia (BI) in late 2019. QRIS has become a lifeline by offering a low-cost and easy-to-use payment method for communities often left out of mainstream financial services. From your local street vendor to the most luxurious designer stores, it is difficult to imagine a merchant that does not have these iconic QR codes plastered all over.

In this edition of The Reformist, we trace the origins of QRIS, from its scattered beginnings to universal nationwide adoption, and how threats from the Western world emerged as QRIS continues to grow and foster greater regionalization across Asia.

From private sector innovation to state adoption

In the mid-2010s, the emergence of fintech applications laid the foundation of what would become the QRIS payment system. From 2017-2018, e-wallets like GoPay, OVO, DANA, LinkAja, and many more began experimenting with QR-based payments to their customers as an online alternative form of payment.

In August 2018, OVO even lauded their system, claiming that over 9,000 small and medium-sized enterprises had already begun using their QR payment services. Conventional banks such as Bank BCA, Mandiri, and BNI with mobile banking features were also involved in this digital renaissance of QR-based payment systems.

Ironically, during that same year, BI demanded that GoPay temporarily shut down its QR payment system for rolling out its services en masse without prior approval from the central bank. The same instance occurred with Bank BCA, which halted its QR code rollout after BI demanded that it do so.

The aftermath of these Payment System Service Providers (PJPs) crowding the market with their own sets of QR payment systems required consumers to have different applications installed, depending on which PJP provided a merchant’s QR code. During this period, it wasn’t uncommon for consumers to have multiple mobile banking and fintech applications downloaded on their phones just to prepare for a situation like this.

Realizing this, the government, through BI, decided to intervene in the market and integrate all the different mobile banks and e-wallets into one standardized QR code. This is not to say that the central bank selfishly co-opted private sector innovation, as BI worked closely together with the Indonesian Payment Systems Association (ASPI) to create the policy behind QRIS and its subsequent implementation, marking this reform as an example of proper public and private sector cooperation.

On Independence Day, 17 August 2019, through BI Regulation No.21/2019, QRIS was officially released by BI and became the universal QR code payment system for all banks and e-wallets, and came into effect on 1 January 2020.

Why QRIS won over the hearts of Indonesians

Even in its novelty, how has QRIS risen to such popularity? The clearest answer lies in its simplicity. Before QRIS, if cash was not readily available, debit or credit cards were the alternative. This, however, comes at the cost of having to purchase an Electronic Data Capture (EDC) machine, which would cost a merchant anywhere from Rp 1 million to upwards of Rp 5 million. With QRIS, merchants are required to pay a one-off registration fee of Rp 30,000 to create a unique code. Afterwards, the payment system requires only a functioning phone and a printout version of the QR code for consumers to scan.

Moreover, creating a financial account through digital banks or e-wallets has never been easier. There is no longer a glaring red tape where individuals are required to physically visit a bank branch to create an account, as it can now be done through a smartphone. Coupled with the fact that Indonesia ranks 4th in the world in total phone ownership at 187,7 million users, the push towards a digital economy is also a step towards financial inclusion. This especially rings true for rural communities with no direct access to conventional banking other than the outstretched reach of Bank BRI through its rural-based agent BRILink.

QRIS also isn’t just easy or practical; it has clear economic incentives that promote its use among domestic vendors. When QRIS was first rolled out, merchants were levied a 0.7 percent Merchant Discount Rate (MDR) on all their transactions, regardless of business scale. This changed when the COVID-19 pandemic struck, and BI slashed its MDR to 0 percent.

In July 2023, the MDR was once again re-implemented as social restrictions were lifted. Currently, micro enterprises are charged 0.3 percent for transactions over Rp 500,000, with anything below exempted from fees. Most businesses, however, fall under the small and medium-sized enterprises classification. These businesses are charged a flat rate of 0.7 percent on all transactions.

Price fluctuations aside, BI’s admin fees for QRIS remain comparatively low in comparison to debit and credit card MDRs. Under the National Payment Gateway (GPN), Indonesia’s interoperable bank framework, all domestic debit card transactions are capped at 0.15 percent for intrabank transactions and 1 percent for interbank transactions. Credit card transactions are levied higher fees as payment systems are managed through international issuers like Visa, Mastercard, and American Express. MDR fees can vary anywhere between 1.8 percent to upwards of 3 percent, depending on the card issuer and the merchant’s EDC provider.

Beyond economics, the impact the COVID-19 pandemic had on shaping a digital–based economy cannot be underestimated. With people unable to interact with one another in real life due to mobility restrictions, the economy moved remote, prioritizing online merchants and digital-based payments. This behavioral shift carried after the end of the pandemic as easy-to-use digital methods like QRIS became a preferred form of payment.

With all of these factors combined, it is only right to highlight QRIS’s statistical growth. At the end of its first year, QRIS logged 124 million transactions, with a total nominal value of Rp 8,21 trillion. Half a decade later, in 2024, that number has skyrocketed to over 6,2 billion QRIS transactions, totalling Rp 659,94 trillion in value. That is a 4,900 percent increase in transactions and a 7,938 percent increase in total transaction value. More recently, in September 2025, BI announced that the QR-based payment system had amassed 58 million users and 41 million merchants, 90 percent of which are micro, small, and medium-sized enterprises.

Realizing digital sovereignty amid threats from Western vultures

Since United States President Donald Trump returned to power early this year, international trade has faced headwinds through the introduction of his unilateral tariff policy aimed at reducing the US’s trade deficit. This has led to Indonesia being hit with a hefty 19 percent tariff on all goods exported into the US, as well as inviting further scrutiny of domestic policies that have affected US-based companies.

In April, the United States Trade Representative (USTR) classified QRIS and GPN as a non-tariff trade barrier to US-Indonesian trade relations. It argued that US-based financial giants Visa and Mastercard were not consulted when BI first created its QRIS regulation.

This argument, however, fails to acknowledge that both companies have long been part of ASPI, who were heavily consulted in the creation of QRIS and continues to play a leading role in its implementation today.

The root of the problem predates the creation of QRIS. Through BI Regulation No. 19/8/PBI/2017, all domestic card transactions are required to go through GPN, mandating the use of domestic switching infrastructure. Under this ruling, foreign equity of switching institutions is capped at 20 percent, effectively sidelining Visa and Mastercard from establishing their own in-house operations. However, even if they were able to domesticate their switching system, their card-based model requires a radical change in behavior and an unrealistic fiscal barrier for local merchants.

Furthermore, controversies surrounding a high transaction fee of 2 to 2.5 percent have plagued Visa and Mastercard’s reputation in the US. Implementing such measures in Indonesia, when merchants are currently charged between 0.3 to 0.7 percent, would be simply untenable.

Friendly Asian countries and the internationalization of QRIS

While the US views Indonesian digital innovation as an adversary, the same attitude cannot be said for Indonesia’s friendly neighbors. In 2023, under the leadership of Indonesia, the Association of Southeast Asian Nations (ASEAN) pushed for greater international interoperability of each country’s QR payment system across the region.

The ‘ASEAN QR Code’ initiative saw Indonesia’s QRIS partnering with Thailand’s PromptPay, Malaysia’s DuitNow, and Singapore’s SGQR. These three countries remain the official partners that offer full interoperability with QRIS, offering a seamless interface and real-time exchange rates between currencies. Other ASEAN countries like Laos, Vietnam, Brunei, and the Philippines are also listed among the countries that accept Indonesia’s QRIS as a viable form of payment. However, the extent of their integration remains unclear, as BI continues to spotlight only the former three countries on its official channels.

At its core, QR interoperability between ASEAN countries not only eases international transactions but also promotes the direct exchange of local currencies between member states, reducing the region’s reliance on the US dollar.

Outside of Southeast Asia, the Indonesian government’s ambitions with its QR payment system have continuously expanded eastward. On this year’s Independence Day, BI announced that QRIS can now be used in Japan, albeit with a limited rollout to 35 official merchants. Concurrently, pilot tests in both China and South Korea are underway for QRIS to operate in both countries by 2026. BI also has its eyes set even further on India and Saudi Arabia as future targets for the QRIS market.

As Asia moves toward a cashless future, QR payment interoperability has fostered renewed regional cooperation built on a shared mission of financial inclusion, a collaborative spirit increasingly rare in today’s pragmatic international order.

What’s next for QRIS?

Since its inception, QRIS has continued to evolve year after year from its fragmented origins to international adoption. It is now experimenting with its new ‘QRIS Tap’ feature, where payments can be made by reading a smartphone’s internal Near Field Communication (NFC) chip on top of a card reader, making payments faster and easier than they already are.

Moving forward, sustained political will remains essential for both the central bank and government to ensure that every Indonesian has access to the formal economy. As it proceeds to grow, the Indonesian government must also remain firm in its stance to protect QRIS from foreign companies that will find ways to lobby their interests at the expense of the nation’s digital sovereignty. At the same time, the regional cooperation model proves that QRIS can expand internationally while preserving the principles of affordability and inclusion that made it successful.

After close to a decade of innovation and adoption, QRIS represents how policy reform isn’t always linear. Change does not have to happen from the public sector alone. When both the public and private sectors work together with a shared vision, private innovation can be uplifted through state promotion.

Correction Note: An earlier version of this article used the term ‘payment system’ too broadly to describe BI Regulation No. 19/8/PBI/2017. It has been updated to use ‘switching’ as per the BI regulation and USTR report. Switching refers to the network that connects different financial institutions, including banks and e-wallets, to process payments between them.

QRIS has become a reform Indonesians are unanimously proud of. What could (or should) be our next QRIS? Discuss below.

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Corruption has been one of Indonesia’s biggest demons. Since the 1998 Reformasi that toppled President Soeharto and his corrupt New Order regime, public officials have promised to root out the nation’s rampant problem. Yet, in this past year alone, the fight against systemic corruption has remained less about justice and more about who it gets to target.

Perhaps you remember two particular high-profile graft cases involving former trade minister Thomas ‘Tom’ Lembong and former education, culture, research, and technology minister Nadiem Makarim. Both were named under Article 2 Section 1 and Article 3 of the Anti-Corruption Act (Law No. 31/1999, later revised under Law No.20/2001), citing ‘state losses’ caused by a policy made during their tenure–without clear evidence of mens rea or malicious intent.

In August, a group of leading lawyers, experts, and scholars submitted an Amicus Curiae brief to the Constitutional Court (MK) to review and provide legal clarity on how to interpret both articles. They argue that the ‘state losses’ terminology in both articles has to be revisited, if not deleted entirely, as they see the articles to be a great deterrent to initiating reforms or making sound policy decisions for fear of criminalization, and that other provisions within the law are more than sufficient to charge actual malicious corruption cases.

Is it true? In this edition of The Reformist, we question our current standing in the fight against corruption and whether it comes with risks of being weaponized.

Criminalizing policy trade-offs?

Tom Lembong’s scandal is a case in point. Before he was pardoned by President Prabowo Subianto, Tom was sentenced to four and a half years in prison and a Rp 750 million fine for reportedly causing the state Rp 578 billion in losses. (Read: When sugar imports become a crime: Putting trade policy on trial)

When Indonesia was suffering a sugar supply shortage, Tom made the decision to import, which prosecutors later cited as causing state loss, leading to his sentence. But this line of thinking penalizes the very essence of public policy: trade-offs.

Much like Tom, former minister Nadiem is currently being tried by the Attorney General’s Office (AGO) under the same state losses argument. He is accused of causing the state around Rp 1.8 trillion in losses for his Covid-era Chromebook laptop distribution policy.

Even if one were to debate the nature of the procurement, the more pressing issue lies in the fact that his special staffer, Jurist Tan, is among the individuals charged under this trial.

When young officials become the target of prosecution, it sends a worrying message to the youth and future generations of reformists about even thinking of joining the public sector.

Government bureaucracy is already deeply hierarchical in itself. There is a structured chain of command where low-level employees are told what to do and are meant to obey. Even if Jurist was the individual who came up with the idea of choosing Chromebooks, her stakes in the matter are contingent on the approval she receives from her superiors and Nadiem himself.

With Jurist’s prosecution, an alarming message is sent to the future generation: either fall in line or risk spending time in prison.

Catch-all articles and the search for mens rea

Both Tom and Nadiem (as well as Jurist) were charged under the aforementioned Article 2 Section 1 and Article 3 of the Anti-Corruption Act, first introduced in 1999 under then-president B.J. Habibie’s reform government.

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

While article 3 states “Anyone who, with the intention of benefiting themselves, another person, or a corporation, abuses the authority, opportunity, or means available to them because of their position or office, thereby causing a loss to the state’s finances or the state’s economy…”

While both articles sound straightforward, former Corruption Eradication Committee (KPK) deputy head Chandra Hamzah warned that even street vendors could, in theory, be implicated under the two articles for selling their food on publicly owned sidewalks.

Is it illegal to set up a hawker stall without a proper permit? Yes. Does the vendor enrich himself by selling food? Yes. Can the state incur financial losses for minor damages on the sidewalk caused by the vendor? Also yes. Did the street vendor, however, have malicious intent in causing damage to the state? Well, no.

Through his analogy, Chandra argues that anyone — as stated in both articles — could be charged with corruption if malicious intent is ignored and state losses become the standard for prosecution.

In comparison, take the recent Riau corruption case: Governor Abdul Wahid was arrested last week by the KPK through a sting operation for planning an illicit kickback scheme of up to Rp 7 billion with the region’s Public Works agency to realize an infrastructure project.

Ignoring the glaring concern that he is the fourth Riau Governor to be arrested for corruption (seriously, get a grip, Riau), KPK prosecutors began their investigation after local whistleblowers warned of potential foul play between Governor Abdul and the public works agency. Only then were they able to find evidence of the illicit act.

Here, the sequence of work is clear:

Suspicion of malicious intent → Investigation → Data validation → Arrest

Conversely, the AGO’s approach in handling Tom and Nadiem’s case is hasty at best:

Identify state losses → Cursory investigation → Arrest → Further investigation

Notably, Abdul is currently being tried under Article 12B (gratification), 12E (abuse of power to obtain financial gain), and 12F (illicit request for payment) from the same act. So, there you go: The Anti-Corruption Act contains specific provisions that govern a wide range of corruption schemes. Yet, prosecutors continue to rely on the vague ‘state losses’ term in high-profile trials.

Let’s not fall into the same hole twice

Today, the AGO has effectively taken over as the administration’s main anti-corruption body. Further entrusting this executive institution with graft investigations risks repeating the same mistakes of allowing the president to dictate who and why a person is charged with corruption.

As the institution continues to exploit the vague ‘state losses’, we should ring the alarm to remind ourselves of how the same top-down procedure was used under the notoriously corrupt Soeharto:

In 1967, the ‘smiling general’ launched his own anti-corruption campaigns, creating the Corruption Eradication Team (TPK) with the Attorney General at the helm. The committee only lasted three years after uncovering some corruption rings, but was never able to properly investigate or prosecute high-level officials in state-owned companies who had direct relations to Soeharto.

In 1970, the TPK was dissolved and replaced by Komisi Empat (Fourth Commission) after student demonstrations demanded greater efforts in tackling widespread corruption. It was composed of notable ‘clean’ historic figures such as former prime minister Wilopo and former vice president Mohammad Hatta. Their greatest finding was unearthing the corrupt practices of state-owned oil company Pertamina. Under the leadership of Ibnu Sutowo, a close confidant of Soeharto, Pertamina deliberately withheld billions from the government and its development fund.

Lacking any legal power to act on its findings, Soeharto quietly disbanded the Fourth Commission shortly after. It wasn’t until Pertamina failed to pay its outstanding debt of USD 10,5 billion that Sutowo was fired from his position in 1975. He was never tried nor investigated further.

Fast forward to 2019, presidential overreach reemerged when the KPK was stripped away from its independence and redirected as a part of the executive branch through the controversial KPK revision bill. This controversial move allowed the president to oversee the graft committee and to have full authority to dictate who gets to govern it.

It’s disheartening to say the least, as it doesn’t take long to remember the KPK’s bravery in going after ruling elites, before it was neutered by this 2019 ruling.

In 2008, it went after former Bank Indonesia deputy head Aulia Pohan, the father of Susilo Bambang Yudhyono’s (SBY) daughter-in-law. In 2014, SBY’s confidant Andi Mallarangeng was arrested for his leading role in the Rp 464 billion Hambalang sports complex graft case. Three years later, House of Representatives speaker and then-Golkar party chairman Setya Novanto was sentenced to 15 years in prison for the infamous Rp 2.3 trillion electronic identification card (e-KTP) corruption scandal.

Unless the KPK is reinstated to its former powers, Indonesia risks replicating the mistakes of its corrupt autocrat instead of strengthening a proven anti-graft institution.

Legal clarity and KPK independence critical for genuine anticorruption efforts

In Riau, malicious intent was the precursor to investigation, whereas it was an afterthought in both Tom and Nadiem’s trials. When state losses become the standard for prosecution without taking into account the policy context in which it was made in the first place, Article 2 Section 1 and Article 3 risk being a tool for what it’s currently used for: a catch-all political trap.

Today (Tuesday, 11 November), the MK will decide on the Amicus Curiae through an official judicial review. Providing legal clarification on both articles can ensure that they are not used inappropriately and that tackling corruption means rooting out systemic graft, not acts of reform.

Moreover, what is needed is real independence, and the benevolence of the executive to restore the powers of the KPK as an independent anti-corruption committee, away from the outstretched hand of the executive branch.

The more the government ignores these pressing demands, the less likely it is for meaningful reform and change to occur under a state of legal uncertainty and latent fear of criminalization.

What is your take on the ‘state losses’ terminology? What do you think should be done to address systemic corruption in this country? Leave a comment.

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Today’s average Jakartans might not remember what commuting in the city was like before Transjakarta. The public transportation system has become the backbone of the city, serving an annual ridership of over 371 million (that’s 3.5 million people every day) - making it the biggest Bus Rapid Transit (BRT) network in the world.

But let’s take a step back and think about how far Transjakarta has come. What began as a controversial experiment two decades ago has evolved into what it is today. For a city notorious for its traffic jams and private cars, Transjakarta represents one of the most enduring and tangible public-sector reforms in modern Indonesia.

Much like Indonesia’s healthcare reform story we’ve covered before (read here), Transjakarta’s journey shows how reforms can succeed when driven by political courage, institutional continuity, financial commitment, and long-term vision.

This edition of The Reformist will probe into the contributing factors that made Transjakarta a successful reform - and what can we learn from it when thinking about future reforms.

A reform of this magnitude requires strong political will

The first chapter of Transjakarta’s story was written under then-Jakarta governor Sutiyoso’s leadership in 2004. After visiting Colombia to see Bogotá’s TransMilenio system, he became determined to create a similar network at home. Nine months later, his administration finished building the first corridor from blueprint to completion. For an infrastructure project of that scale, that pace was almost unheard of.

Residents initially resisted this project, complaining about road closures and reduced car lanes. The backlash delayed the launch, but Sutiyoso persisted. By 2007, the network had expanded to seven corridors, serving more than 74 million passengers in its first two years.

It’s hard to argue that Transjakarta would have succeeded without Sutiyoso’s stubborn determination. His top-down, risk-tolerant approach was often controversial, but scholars have argued that it was exactly what allowed the project to break through Jakarta’s bureaucratic inertia. Big reforms rarely happen without a political figure willing to take the heat and push through resistance.

Successors’ commitments are key to lasting change

While Bogotá’s TransMilenio stagnated under later mayors (mainly due to the project being too closely associated with former mayor Enrique Peñalosa) Jakarta’s BRT system continued to expand. Every governor since Sutiyoso has built upon his legacy by adding something new to Transjakarta, a proof that institutional resilience matters as much as individual vision.

Fauzi Bowo introduced an Intelligent Transport System with GPS tracking and smart traffic lights to improve bus operations. Though, it may be noted that he was criticized for not prioritizing building new corridors.

Joko Widodo, during his brief tenure as governor, focused on restoring public trust and professionalizing management by turning Transjakarta into a city-owned company (BUMD). He also introduced feeder services connecting the elite neighborhoods of North Jakarta to Transjakarta main corridors to persuade upper-middle class to switch from riding their cars to taking public transport.

Meanwhile, Jokowi’s successor, Basuki Tjahaja Purnama (famously known as Ahok), emphasized improving quality over expansion. He launched Corridor 13 (Jakarta’s first elevated BRT corridor) and began planning the integration of feeder fleets into the Transjakarta network, introducing formal Minitrans that replaced older bus systems with a buy-the-service model. His administration also laid the groundwork for the angkot (microbus) integration that was realized under the next administration.

Under the next governor Anies Baswedan, the city shifted focus from building new corridors to multimodal integration through what he dubbed Jak Lingko. He expanded the buy-the-service concept to angkots (Mikrotrans) and revitalized the passenger experience by improving service standards and eliminating the culture of ngetem (idling to wait for passengers). Anies’ administration also connected Transjakarta with MRT and LRT networks while also introducing the first electric bus fleet.

Acting Governor Heru Budi Hartono has since built on Anies’ foundation, targeting 200 e-buses by 2024.

What’s remarkable is that despite changes in leadership and political agendas, Transjakarta remained a shared civic priority. Each administration treated it not as a partisan legacy project but as essential urban infrastructure.

Clear and stable funding policy is critical

Jakarta’s financial commitment has been just as important if not more. The city continues to heavily subsidize Transjakarta through an annual Public Service Obligation (PSO), as of 2022 covering roughly 80 to 90 percent of its operating costs. In 2024, this amounted to Rp4.2 trillion, funding a fleet of over 4,300 buses.

The city’s consistent support has kept fares remarkably affordable. Since opening in 2004, ticket prices have risen only from Rp2,500 to Rp3,500, making Transjakarta one of the cheapest BRT systems in the world.

Last June, the administration announced that this year’s subsidy budget for Transjakarta would be increased by around Rp400 billion, which would go into adding inner city routes and electric bus fleets. However, the latest news reported that the Jakarta administration is now planning to increase the Transjakarta fare following regional transfers cut (from the state budget) that may impact public transport subsidies.

Nonetheless, heavily subsidizing public transport is not just a fiscal decision; it is a policy statement that mobility should remain accessible to everyone.

Flexible governance makes way through rigid bureaucracy

Transjakarta’s endurance also came from its ability to adapt institutionally. Initially managed as a Public Service Agency (BLU) under the city’s Department of Transportation, after years of advocacy, it was restructured in 2014 into PT Transportasi Jakarta, a city-owned enterprise (BUMD) with greater managerial autonomy.

This shift gave the agency more freedom in budgeting, hiring, and long-term planning while maintaining public ownership. The new structure allowed it to implement a “buy-the-service” model, where private bus operators are paid under fixed contracts tied to performance standards. This replaced the old “per passenger” system that once encouraged dangerous competition between drivers.

By balancing public oversight with private-sector efficiency, Transjakarta was able to professionalize operations without losing its social mandate.

The devil’s in the details: First and last mile integrations can’t be neglected

Between 2015 and 2020, Transjakarta’s routes expanded by over 850 percent, now covering more than 82 percent of Jakarta’s area. Much of this growth came through Jak Lingko (was OK-OTrip under the preceding administration), which unified Jakarta’s once-chaotic network of angkot (microbuses) and minibuses. Operators signed formal contracts with standardized routes and fares, all integrated with the BRT, MRT, and LRT through a single card system.

The city also invested in walkability and cycling infrastructure to support first- and last-mile connectivity. Between 2019 and 2021, it built or upgraded 87 kilometers of sidewalks near BRT stations, along with 63 kilometers of bike lanes and an 11-kilometer protected cycleway along Sudirman–Thamrin that links nine BRT and six MRT stations. These physical improvements helped propel Transjakarta’s role from a standalone bus system into the spine of a multimodal urban mobility network.

There’s always room for improvement

Transjakarta still faces growing pains. With just 4,388 buses serving roughly the same daily ridership as Singapore’s 5,800-bus public transport system, Jakarta’s BRT network often struggles with overcrowding and long wait times. Dedicated lanes are regularly encroached upon by private vehicles, eroding speed and reliability.

Notably, safety and inclusivity remain pressing issues. A survey by the Safe Public Space Coalition recorded over 3,500 cases of harassment in public areas, nearly a quarter of which occurred on public transport. Accessibility also needs improvement, as some stations have misplaced braille buttons and confusing gate layouts that make them difficult to navigate for visually impaired users.

Jakarta’s next phase of reform must focus less on expansion and more on quality: safer, cleaner, and more inclusive services that reflect the dignity of the millions who rely on them every day.

Two decades after its launch, Transjakarta stands as proof that persistence, not perfection, drives reform. From Sutiyoso’s stubborn determination to the steady improvements made by later governors, the system has evolved without losing its purpose: moving people, not just vehicles.

Jakarta still has a lot of homework ahead to make its transport system safer, more reliable, and more accessible. But Transjakarta’s story shows what is possible when a city keeps its eyes on the long game; when each administration builds on what came before instead of starting over.

In a city with veins often clogged by gridlock, that consistency might just be Jakarta’s most radical achievement.

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What other groundbreaking city-level reforms can we cover next? Comment below!

Remember the iconic photo above? It’s one of the most widely-circulated images from the 1998 Asian Financial Crisis: then-IMF managing director Michel Camdessus, hovered behind President Soeharto with his arms crossed; looking down (quite literally) as the president, who had been in power for 32 years, bowed down to sign the IMF deal.

Many Indonesians looked at this photo and saw a symbol of the country’s loss of economic sovereignty to the global elite… is this true?

In 1998, the IMF offered Indonesia a 43 billion dollars bail out package to “help” us recover from the Asian Financial Crisis. The aim of the package was to stabilize the Indonesian economy; but it also facilitated huge shifts in patterns of financial ownership and influence – many of which remain controversial to this day.

In this edition of The Reformist, we are taking you back to almost three decades ago to revisit how the IMF measures shaped Indonesian banking today.

The IMF’s demands through the years

Demands from the IMF began taking place in October 1997: banks and corporations were forced to disclose ownership, move towards market-based interest rates, and submit to foreign auditing standards. This resulted in the exit of insolvent banks and ownership changes of major private banks.

In some cases, foreign investors could take stake in recapitalized institutions at significantly low prices. At a high level, the IMF measures pushed Indonesia into a more market-oriented system.

By 2004, ten major state-owned companies ranging from finance to infrastructure were privatized (e.g. Indosat sale to Temasek). Local governments followed suit by privatizing public hospitals due to increased regional autonomy.

By the late 2000s, observers noted that Indonesian banks were playing by very different rules than under Soeharto: they were subject to strict capital requirements, independent oversight, and no longer bolstered by state bailouts.

Restoring the health of Indonesia’s banking sector

A foundational change was raising and enforcing bank capital adequacy (CAR). Post-crisis recap set transitional targets (4 percent by end-1999, rising to 8 percent by end-2001) and since then Indonesia has maintained a minimum CAR of 8 percent under BI/OJK rules. Essentially, this is a buffer to absorb potential losses. This was a high threshold that sought to ensure that banks stopped lending recklessly.

Another important change was the tightening and formalization of reserve requirements, known locally as Giro Wajib Minimum (GWM). While the IMF documents referred more generally to “reserve requirements” as a monetary policy lever, Bank Indonesia translated this into a statutory reserve framework.

In the early 2000s, BI issued regulations that obliged banks to hold a fixed percentage of their third-party funds (DPK) in reserves at the central bank. These rules meant that banks could no longer freely expand credit without keeping a liquidity buffer at BI, reinforcing prudence in an industry that had previously been highly leveraged.

By anchoring liquidity management in this way, the reserve requirement became a permanent macro-prudential tool, complementing the new capital adequacy rules and helping restore confidence in Indonesia’s banking system.

To solidify the bank cleanup, Indonesia formed Badan Penyehatan Perbankan Nasional (BPPN), or the Indonesian Bank Restructuring Agency, under Presidential Decree 27/1998. It sought to handle troubled bank assets to align with IMF expectations.

Essentially, this meant that BPPN was a huge “bad bank” – it received non-performing loans, took equity stakes in distressed banks (sometimes nationalizing them), and gradually resold its assets. It took over the above banks that did not hit the needed CAR.

During its six-year span, it ran a recapitalization scheme, an asset-management arm, a risk-management unit, and later managed government-held shares in banks under restructuring.

BPPN has… interesting results in recapitalizing significant parts of the banking system in late 1998.

For banks deemed to be “viable,” BPPN injected capital (mostly using government bonds) in exchange for ownership shares, and original bank owners only needed to provide about 20 percent of the funds. About 7 percent of the banking system was liquidated or fully taken over by BPPN (these banks were called Bank Take Over or BTO). The rest were recapitalized or merged, meaning that the recapitalization of banks was borne fully by the government.

However, as banks normalized, the BPPN divested government stakes, many of which were sold to foreign investors. For example, Bank Danamon was recapitalized with over Rp61 trillion in bonds, merged with nine BTO banks, and later saw government stakes sold off to foreign investors, namely Temasek Holdings and Deutsche Bank AG.

Like Bank Danamon, Bank Niaga couldn’t meet the recapitalization requirements, so BPPN stepped in and took control during the crisis. The government then sold its controlling stake (51 percent of Bank Niaga) to Commerce Asset-Holding Berhad (CAHB), a Malaysian financial giant that later became a part of CIMB Group. Allegedly, this was to “promote professionalism” and raise funds for the state.

Institutional overhaul: granting BI independence and the formation of LPS

There were many regulatory changes that guided austerity measures from the IMF, all of which fundamentally sought to end the central role of state credit guarantees.

However, there were two main institutional changes: the independence of the Central Bank (Bank Indonesia, or BI), and the formation of the Indonesia Deposit Insurance Corporation (Lembaga Penjamin Simpanan, or LPS).

Among other requirements, Indonesia was tasked with rewriting Law No. 23/1999, which granted full independence to BI. Under Article 4 of the new BI Law, the central bank was defined as an “independent state institution [...] free from any interference” of the government, with the objective of “achieving and maintaining” the stability of the rupiah.

Affording independence to BI meant that the government could no longer directly dictate its actions. This is important because without such independence, the government could pressure BI to buy bonds, print money, or pursue short-term policies that risk fueling inflation and destabilizing the economy.

This was a radical shift from the pre-Crisis era, during which BI governors were included in the executive cabinet. In practice, there were cases of politics testing BI’s independence. But there finally was a legal foundation for BI independence, consequently leading to BI adopting open market operations and inflation targeting that anchored inflation around 3-5 percent in Indonesia.

To complement BI, the state also introduced an explicit deposit insurance scheme to restore public confidence. This means that depositors were guaranteed the safety of their funds up to a certain limit, even if their bank failed.

This was institutionalized under Law No. 24/2004, which created LPS. It formally began operation in 2005; a huge change in how banks viewed risk management as banks previously had a de facto state guarantee of survival.

In this sense, LPS and its deposit insurance gave Indonesians a safety buffer against losing their savings if a bank collapses. This naturally rebuilt citizen trust in financial institutions after the 1998 Crisis and incentivized banks to be more prudent with managing money.

In addition to these two major changes, directed credit schemes (the mandatory allocation of credit to certain industries) were mostly phased out. Capital account controls were also liberalized to encourage greater integration with the global financial market.

The long-term impact for Indonesia

Analysts largely agree that the 1998 Asian Financial Crisis led Indonesia to be better-prepared for financial turbulence. This was particularly obvious during the 2008 Asian Financial Crisis.

In fact, an IMF country report from July 2008 noted that the financial sector displayed “resilience in the face of the global credit market turmoil,” and noted improvements such as non-performing loans falling to about 4 percent that year. This was due to a combination of factors, including strengthening external balances, increased foreign exchange reserves, reduced government debt, and improved banking supervision.

Due to different policy responses and improvements in fiscal, monetary, and banking conditions since 1998, Indonesia handled the global financial crisis “relatively well”.

Reform born out of crisis?

Earlier this year, former Minister of Finance Chatib Basri was quoted as saying, “Don’t waste the crisis; good policies are born in difficult times” to a local news outlet. He is right, mostly. The crisis did force Indonesia into reforms that ended up shielding the country through stronger capital requirements, tighter supervision, BI independence, and the establishment of deposit insurance.

So, yes, a crisis can be a catalyst for reform. However, it’s hard to argue that it’s the best case scenario. Ideally, we shouldn’t wait for disaster to strike.

Further Reading:

• The IMF and the Indonesian Crisis (Stephen Grenville)

• The Indonesian Bank Crisis and Restructuring (Mari Pangestu)

• IMF aid helping the poor? (Sugeng Bahagijo)

• Bank restructuring and financial institution reform in Indonesia (Yuri Sato)

Got different takes? Comment below or write your article and send it to us: connect@thinkpolicy.id

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A little over a week ago, a young ojol (ojek online) driver named Affan Kurniawan was killed. In a video widely circulated online, witnesses gasp in panic as a police “protest control” vehicle runs over Affan—who seemingly stumbles right before being hit by the vehicle—and then continues forward. Affan is rushed to the hospital, where he is pronounced dead within five minutes.

But Affan was not even a protester; he was just doing his job, delivering food like thousands of other ojol drivers across Indonesia. His death was needless–a product of reckless force and a disregard for public safety. Yet, even more shocking is how unsurprising this tragedy feels. We have seen this story too many times before, in different places and under different circumstances, but always with the same actors and the same lack of accountability.

From Kanjuruhan, where more than 130 lives were lost after police fired tear gas in a packed stadium, to the murder of Brigadier J by his own colleagues, the Indonesian police have left a trail of violence in their wake; often accompanied by an inevitable cover up. In 2025 so far, police violations of civilian liberties were found to be the most common (52 cases), in comparison to the military (4 cases) or the government (6 cases).

Each episode sparks outrage, hashtags, and investigations that (often) go nowhere. Beyond the headline cases, many smaller abuses unfold every year: forced confessions to close cases, torture and sexual assault in custody, evidence tampering to protect the guilty.

Between 2020 and 2025, KontraS collected data on violent practices involving the police in Indonesia, with a total of 3,197 cases found. At the same time, countless reports filed by ordinary citizens go nowhere, as police fail to investigate or deliberately stall cases. This is why the hashtag #PercumaLaporPolisi (#NoUseGoingToThePolice) has long resonated so strongly, and why ACAB/1312 has been frequently seen online. People do not just doubt the competence of the police, they doubt their integrity and intent. And so when we talk about institutional reform, how could we forget the police force?

In this installment of The Reformist, we put forward that the systematic violence and impunity within the Indonesian police is not only the result of individual misconduct – instead, it is perpetuated by a deeply-flawed institutional structure. To reform the police force, we must (1) decentralize authority, (2) strip away non-policing tasks, and (3) reverse accountability to make officers answerable to the public they are meant to serve.

Reform 1: Decentralization

The Indonesian police operate as a single, national force, under the National Police Chief (kapolri, or Kepala Polisi RI). In theory, this centralization should ensure efficiency. In practice, it breeds impunity. When a low-level officer misbehaves, his superiors are incentivized to cover it up, because every failure reflects badly on the chain of command. This is perhaps why bodycams are resisted, or why CCTV mysteriously breaks at critical moments. It is a system designed to protect itself rather than the public.

This structure also insulates the police from democratic accountability. A police chief in Yogyakarta does not answer to the governor or the sultan, but to a Kapolda (regional police commander), who in turn answers only to the Kapolri (national police chief), who alone reports to the president. No local mayor or governor has the authority to discipline or remove a failing police officer, no matter how badly he performs. This is concerning, fundamentally because the police are responsible for day-to-day law enforcement. This includes regulating protests, issuing permits, investigating crimes, and maintaining order in neighborhoods – among many other tasks. So, this means that those who feel the impact of police actions most directly—ordinary citizens and their elected local leaders—have no meaningful authority over the institution.

Contrast this with the fire department, which falls under the authority of elected officials. Firefighters are more trusted by the public, and even admired, because they are seen as consistently showing up in moments of crisis without asking for anything in return. This is arguably because they report to the regional mayor or regent, officials who must seek reelection and therefore have every incentive to ensure the service delivers. If they fail, local residents can demand their elected official to take action. The police, by design, are shielded from that same mechanism.

So this is where our first reform comes into play: localization. Quite simply, everyday policing, as mentioned above, should fall under the authority of local government – much like sanitation, firefighting, and waste management. Regional police commanders should answer to, be appointed and removable by local administrations. This would delineate a regional police force with our national police force – which can then focus on cross-jurisdictional crimes like terrorism, drugs, and human trafficking. Naturally, law enforcement would be shifted into a local political issue, one that citizens can hold their leaders accountable for.

Reform 2: Task Adjustments

The second reform is to remove non-policing tasks. For decades, the Indonesian police force has accumulated functions far beyond their core mandate of enforcing the law and protecting the public. Today, they not only investigate crimes and maintain order, but also manage driver’s licenses, control vehicle registrations, oversee traffic, and even issue permits for everyday activities. In this sense, the police play a crucial role in the Indonesian socio-political landscape, spanning law enforcement, security, and public order – on both administrative and enforcement levels.

Take driver’s licenses as an example. There is no reason why a law enforcement officer should be in charge of whether a citizen can legally operate a vehicle. Licensing is a technical and bureaucratic task, better suited to a civilian agency under the Ministry of Transportation or even local governments. Yet, because the police monopolize the process, it has become a notorious (and normalized) source of corruption. It must be noted that this reform has previously been proposed by a DPR representative – to the dismissal of Ministry of Transportation representatives, who claimed that the Ministry lacked the capacity to take over, and did not have experience in the area. Instead, they claimed that they had to focus on terminals and weighbridges.

Similarly, traffic management could—and should—fall under local transportation offices. Deploying police officers with batons and guns to manage congestion not only intimidates ordinary drivers but also creates daily opportunities for petty extortion. In fact, several legislative and executive orders (incl. UU No. 22/2009 and PP No. 79/2013) gives the Department of Transportation power over traffic management. In cases where the Department has taken over, results have proved promising.

Stripping away these non-policing tasks achieves two important things. First, it reduces corruption by cutting off opportunities for bribery that have become embedded in routine interactions between citizens and the police. Second, it refocuses the institution on what should be its true purpose: law enforcement and public safety. When the police spend less time chasing traffic violations and miscellaneous paperwork, they have fewer excuses for mishandling serious criminal investigations – and corruption.

Simultaneously, shifting administrative responsibilities to local civilian agencies makes everyday governance more accountable. If a licensing office fails, citizens can pressure their mayors or governors to fix it. If traffic management collapses, voters can demand better from their local officials. In both cases, the responsibility rests with democratic institutions—not with the insulated, militarized bureaucracy that makes up our police force today. By narrowing the scope of police authority to actual policing, Indonesia can reduce both corruption and public resentment, while strengthening democratic control over the basic functions of daily life.

Reform 3: Oversight and Reverse Accountability

The third pillar of reform must be making the police accountable to the people they serve. Today, Indonesia’s oversight institutions are essentially powerless in interactions with the police force – the National Police Commission (Kompolnas) and Ombudsman can only issue non‐binding recommendations, and no independent civilian complaints board exists to bring abusive officers to justice. In practice, most investigations of police misconduct are handled internally, “in the hands of the police themselves,” which predictably breeds impunity. Under this status quo, citizens have virtually no avenue to challenge abuse or demand transparency.

We must flip this model upside down by empowering truly independent oversight. As other critics have suggested, the National Police Commission (Kompolnas) should be given statutory powers to investigate and sanction officers, away from external (read: political) interference. Theoretically, officers would then answer to an authority that represents the public they serve – not just their chain of command. In addition to this, the International Crisis Group (ICG) have previously argued that Indonesia needs “a competent civilian body that can police the police” so that abuse has tangible consequences. In the short term, implementing these reforms would mean that police misconduct (from rogue superiors to rank-and-file) is no longer swept under the rug by internal affairs alone, but is subject to civilian review and public scrutiny.

But oversight on its own is not enough. Accountability must also be reversed. Right now, victims carry the heavy burden of proving that police misconduct occurred, a nearly impossible task when evidence is controlled by the institution itself. The burden should instead fall on the police: every time they make an arrest, disperse a crowd, or fire a weapon, they must be able to prove in court that their actions conformed to standard operating procedures. If they cannot provide that proof, the case should be dismissed, and disciplinary or even criminal sanctions should follow. This flips the incentive structure. Suddenly, it would be in the police’s own interest to ensure body cameras are running, CCTV is functional, and reports are properly logged. Rather than resisting transparency, officers would embrace it as their shield. Body cameras could exonerate officers falsely accused of brutality just as they could expose those who abuse their power.

By making officers answer to the public instead of only to their superiors, Indonesia can break the cycle of impunity. In a healthy democracy, the police are public servants, not a law unto themselves. We must dismantle the current hierarchy by ensuring that no officer is above the law. Only when the police know they will face real, public checks can Indonesia begin to restore trust and guarantee that force is used to protect citizens.

The urgency of reform

Unfortunately, the latest drafts on the revisions to the current criminal code do not seem to be leading us into this direction. In fact, it might be leading us to the complete opposite – with this, police investigators can supervise other investigators (e.g. Civil Servant Investigators) – thus opening doors for interference. The new Criminal Procedure Code (RKUHAP) bill actually eliminates a crucial mechanism in pre-trial motions to prevent arbitrary action by law enforcement institutions that had appeared in earlier drafts, which required all arrests to be reviewed in a pra-peradilan court before proceeding — a mechanism somewhat akin to a grand jury review. By scrapping this provision, the new draft tilts the balance toward law enforcement discretion and away from judicial oversight. This shift risks making arbitrary arrests easier and weakens one of the few checks civilians could rely on against coercive state power. Reform, therefore, must be reframed. It should not be about expanding police authority, but about building structures that guarantee accountability and create lasting trust.

After all, a police officer trusted by the community is more effective than one feared by it. These reforms will not eliminate abuse overnight, but it would take away many of the most visible and routine opportunities for exploitation. Officers who know that misconduct will end their careers, are more likely to think twice before resorting to violence or intimidation. Similarly, communities that know they have the power to discipline or remove a bad officer, can hold leaders accountable. Indonesia has spent years promising police reform, usually in the form of more training or new codes of conduct. But you cannot train away impunity. When authority is too centralized and accountability too distant, abuse becomes inevitable.

What we need is not another seminar or declaration, but a redesign of the institution itself. Localize authority, divest non-policing tasks, and reverse accountability. Until then, the police will remain what they are today: feared and dangerous. Affan’s death is not just another tragedy, it is a reminder of how much we have failed to fix.

What do you think? How can Indonesia redesign its policing institutions so that they truly serve citizens?

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In our last edition, we discussed SD Inpres, a reform on education policy under a centralized system, instructed by former President Soeharto. After Soeharto stepped down, his successor B.J. Habibie instigated a different large-scale reform: decentralization.

Under Habibie’s rule, Indonesia saw a number of independence movements across the archipelago, causing the then-president to view increased regional autonomy as a tool for maintaining state integrity. Thus started the Reformasi era that ushered in a string of social, political, and economic reforms, all with the foundational goal of establishing a functional democracy.

This piqued our curiosity: how has decentralization impacted our education policymaking? We thought it would be interesting to zoom in on this – in contrast to our last discussion on the centralized SD Inpres approach.

Despite its laudable goal to promote regional autonomy for democratic fairness, Indonesia’s large-scale education decentralization created significant implementation challenges in the education sector.

In this edition of The Reformist, we are taking a closer look at these challenges: from legislative overlap and unequal financial burden on local governments, to the overall inconsistent quality of education.

Reformasi-era regional autonomy

Before we examine education policy in a decentralized policymaking environment, let’s first understand the legal basis of regional autonomy.

There are two main laws relevant to how regional autonomy was adopted: the Regional Autonomy Law (No. 22/1999), and the Fiscal Balance Law (No. 25/1999).

The first law transferred substantial administered authority from the central government to kabupaten (regency)-level governments, granting the local authorities control over public services such as healthcare, education, infrastructure, and local governance.

The Fiscal Balance Law complemented this by allocating regions with a larger share of national revenues, particularly from natural resources, so that local governments could finance their new responsibilities.

Note that these laws transfer power to regencies rather than provinces, which might have seemed to make more sense logistically. This was done perhaps due to fears that provincial-level authorities could use the capital to encourage independence movements.

Provinces only have de facto power under Article 9(2), which means they can only exercise power if a certain regency has yet to do so. Other than that, provincial authorities are responsible for “the powers in government sectors that cross the borders of regencies and cities along with the powers in other specific government sectors” (not expanded upon).

In this sense, although the legislation set a foundation for increased legislation to support regional autonomy, the delineation of power between regional and central authorities was blurry at best.

Under Article 7(1) of the Regional Autonomy Law, central government figures should be responsible for “foreign affairs, defense and security, the administration of justice, monetary and fiscal matters, religion and responsibilities in other sectors,” – of which Article 7(2) expands upon.

Regardless, there is a distinct lack of specificity that limits the understanding of institutional overlap in regional matters.

At its core, the reform followed a residual powers principle, wherein any public task not explicitly reserved for the central government (as outlined in Article 7 above) is left to local governments. It’s hard to argue that this doesn’t lead to some programmatic tensions between national-level and regional-level policies.

Think of Government Regulation on the Division of Affairs between Governments (No. 38/2007), which supports regional autonomy by dividing state responsibilities.

This policy stated that the central government is responsible for setting national policy, guidelines, standards, and criteria for running education at all levels, including the general management of higher education. Concurrently, regional governments are responsible for setting up operational plans, managing pre-schools, and non-formal education.

The vague division of affairs in education policy

The education-specific implementation policy was Government Regulation (Peraturan Pemerintah) No. 20/2003, which established a national education system that sought to “empower societal participation in the provision of education based on regional autonomy” throughout Indonesia, based on the Regional Autonomy Law and the Fiscal Balance Law. However, implementation guidance remained vague.

In Article 4(11), there is a reference to “shared responsibilities” between the central and local government to guarantee education for citizens aged 7 through 15 years old. These “shared rights” include directing, guiding, assisting, and controlling the education provisions according to the existing regulations, but without pointing to any specific pieces of regulation.

This was later complemented by the Regional Authority Law (No. 23/2014), which ensured a clearer division of responsibilities. The curriculum for the elementary and middle school would be set at the regency/city level; for high school and vocational school at the provincial level, and for higher education at the national (central government) level.

Perhaps a more tangible aspect of foundational Regional Autonomy Law can be found in Article 49, which mandates that the allocation to education must be a minimum of 20 percent of the budget from both central and local authorities.

However, this does not always turn out in the ideal way. Let’s illustrate.

The unclear distribution of financial burden

In a 2020 study, the World Bank found that 22 percent (112 of 508) of regencies/cities, and 35 percent (12 of 34) provinces did not fulfill the minimum budget allocation. Of the areas that did meet the minimum allocation, only 70 percent (270 of 388) regencies/cities have more than 95 percent realization rates.

This is echoed on the national level. The realization of the education budget was 18 percent in 2007, dropped to 15.6 percent in 2008, and stayed at around 15-17 percent between 2022 and 2024. In 2025, the education budget was set at Rp724,3 trillion or about 22 percent of the state budget, but the realized figure is expected to remain at 17 percent of the budget.

To make matters worse, the money that does end up being spent doesn’t always reach its target. For example, sekolah kedinasan (government-affiliated academies) falls under education spending. It takes up about 39 percent of the educational budget (Rp104.5 trillion) each year, even though only 13,000 people directly benefited from this budget.

Meanwhile, formal education from elementary to high school—which should be for 62 million students—only takes up 22 percent of the budget (Rp91.2 trillion). So, even though 20 percent of the national budget goes to education, perhaps this isn’t fully realized. And, the money that does make it to the ground… might not even be properly distributed to children in fundamental schooling years.

Did decentralization make the quality of education inconsistent across the country?

Data from shortly after the Reformasi era showed that literacy and enrollment rates did improve on average. However, one must note that they rose at a faster rate before decentralization. Some studies even found average student test scores to decline in the 2000s despite larger local budgets. This is chalked up to a few reasons, including the fact that, quite simply, this education system was already building upon an existing one. But perhaps, most fundamentally, it boils down to technical inconsistencies and deep quality disparities.

Observers note that coordination between the different layers of government (the central, provincial, city, and regency governments) remain weak and “poorly synchronized” to this day.

This weakness has inevitably led to inconsistent quality across regions, particularly between well-resourced and under-resourced regencies. In fact, research has shown that rural areas and less-developed regions lag behind their wealthier counterparts significantly.

Although differences in educational attainment between provinces decreased, the gap on a local level (between cities/regencies) grew larger. This indicates that while the bigger picture of education across provinces is more equal, significant disparities exist between neighboring cities or districts.

Strikingly, the same paper notes that fiscal capacity does not automatically translate to better educational outcomes. Instead, factors relating to economic development and urban infrastructure are significantly important for improving education. The World Bank complements this finding by suggesting that stronger education governance allows for more qualified teachers to work, leading to better student achievement.

The elephant in the room: Corruption in the education sector

The local governments receive the School Operational Assistance Fund (Bantuan Operasional Sekolah, or BOS) from the state budget under a decentralised framework. But weak regional oversight makes it easier for misuse of funds to happen before the money even reaches the classroom. This is evident, given the fact that corruption cases in the education sector are one of the most frequently-identified and frequently-prosecuted cases by the KPK.

A 2024 report by the KPK notes that 13.39 percent of the sampled schools receiving BOS funds admitted that their use of BOS funds did not align with the designated purposes. Misuse of BOS funds in primary and secondary educational institutions included:

• extortion, deductions, or levies reported in 8.74 percent of schools;

• nepotism in procurement processes affecting 20.52 percent of schools;

• inflated costs of fund utilization in 30.83 percent of schools; and

• other forms of misuse in 39.91 percent of schools

In this sense, despite a hypothetical 20 percent budget allocation, there is still a clear disconnect between the money being theoretically committed to education versus the money that reaches students.

Decentralization in education: Empowerment vs. unaddressed disparities

Decentralization has facilitated the regional autonomy that perhaps defines Indonesian democracy. There is no doubt that it has contributed to empowering local-first governance solutions. However, it has also produced a financially chaotic approach to education policy, which also leads to significant disparities in the resulting quality of educational outcomes.

Among other things, there are several key policy approaches that can be applied:

• First, there needs to be a clearer reassessment of local capacities to deliver education service. This would allow for a better distribution of resources, as well as precise targeting of curriculum strengthening.

• Second, target money where children actually are. Make a minimum allocation for students from elementary through high school, rather than sekolah kedinasan.

• Last of all, the government could entertain strengthening accountability through a variety of technological (or non-technological) solutions.

Ultimately, the impact of decentralization on education is a double-edged sword. It has allowed for higher literacy and enrollment rates, yet faces challenges in corruption, financial fragmentation, and inequality in educational outcomes. The challenge for future governments is clear: maintaining regional autonomy while enforcing clear coordination with other layers of government, so that schools can be of more consistent quality throughout the archipelago.

What do you think? How can the government address these challenges, so decentralization can actually empower regional governments to autonomously manage the education system, instead of widening the education quality gap?

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On July 14, the Prabowo administration began its implementation of Sekolah Rakyat (‘The People’s School’), an initiative that aimed at providing educational opportunities for children at risk of dropping out of school due to financial limitations. The tuition-free schooling initiative is spread across 63 schools (with 37 more planned to open), and run by the Ministry of Social Affairs. Students would live in on-campus dorms that provide meals and receive “character-building education” in the evenings along with formal lessons in the daytime.

Sekolah Rakyat has its critics, and rightfully so, but to expand on that would need its own article. What we want to talk about in this edition is that Sekolah Rakyat was hardly the country’s first education reform initiative where a sitting president instructed the building of new schools to solve an outstanding education problem.

In the New Order era, President Soeharto released a Presidential Instruction (Instruksi Presiden, or Inpres) No. 10/1973 ordering the building of elementary schools, along with providing the books and teachers. The schools, famously known as SD Inpres, sought to expand learning opportunities for elementary school children through a larger emphasis on spending on educational initiatives.

This edition of The Reformist is taking you back half a century to zoom in on what made SD Inpres work – and what can we learn for future policy decisions, including perhaps (or especially) the continuation of Sekolah Rakyat.

The schools that improved lives–and the economy

In 2001, now-Nobel winner Esther Duflo wrote her PhD dissertation that set the foundation of using scientific evidence gained from field experiments to inform policy decisions. The object of her breakthrough study was Indonesia’s New Order-era elementary school expansion program SD Inpres.

SD Inpres was one of the most ambitious reforms launched during Indonesia’s New Order regime, leading to higher levels of education and national economic growth, as Duflo’s study proved.

Duflo also reported that from 1973 to 1980, up to 61,000 schools were constructed under the program. Former students of SD Inpres saw a 1.5 to 2.7 percent increase in wages in comparison to those who did not participate in SD Inpres. This then translates to national economic returns in education ranging from 6.8 to 10.6 percent.

Beyond economic impact, SD Inpres reduced illiteracy rates across Indonesia from 39.1 to 15.8 percent, between 1971 and 1980. Recent studies have built upon this by showing that SD Inpres in turn increases the probability of household heads being literate by 49.4 percentage points.

But what made SD Inpres work? Let’s get through it one by one:

1. Money, money, money (must be funny!)

SD Inpres was made possible by Indonesia’s sudden profit from soaring global oil prices in the 1970s.

Despite multiple attempts at reforming the education system, the Sukarno administration largely failed to achieve universal primary schooling. In the subsequent Suharto regime, there were additional attempts in 1967 and 1972, both of which incentivized state-run schools in exchange for greater fiscal subsidies - and largely failed.

In the mid-1970s, global oil prices began to surge dramatically, giving Indonesia—then a major oil exporter—a huge boost in government revenue. The Soeharto regime then allocated a huge influx of these windfall oil revenues for primary school construction.

This gave way to the launch of SD Inpres. With a huge influx of windfall oil revenues, the regime allocated considerable resources for primary school construction.

Under Presidential Instruction No. 10/1973, there were specified funding allocations to each district, based on the child population who weren't yet enrolled in school – from the total 61,000 schools built, districts received between 16 and 824 new elementary schools.

Funding for this program, by the end of the First Long-Term Development Plan (PJPT I, which lasted from 1969 to 1994), amounted to as much as Rp 6.5 trillion (not adjusted for inflation).

Here’s the problem: in the early 1980s, another global oil crisis led to declining oil revenue that respectively caused cutbacks in education spending. This meant that planners were unable to fulfill intentions to begin constructing the junior high school (Sekolah Menengah Pertama, or SMP) buildings, and that millions of primary school-educated children were faced with far too few local middle schools to continue their education.

2. Long-term policy commitment

Similarly to the story we did on what made BPJS work as a reform (read here), the SD Inpres program worked because it was a long-term policy commitment that had frequent updates. Under Pelita II (Suharto's Second Five-Year Development Plan), formulating the expansion of schooling opportunities was listed as one of the core priorities of development in the education sector. This cleared the way for a sustained focus on SD Inpres as a policy priority.

From 1973, each two-year interval saw thousands more elementary schools built, based on continued policy prioritization. Here's a key breakdown:

• 1973–74 (Inpres 10/1973 and 6/1974): 6,000 new schools approved

• 1975–76 (Inpres 6/1975 and 3/1976): 10,000 new schools approved

• 1977–78 (Inpres 3/1977 and 6/1978): 15,000 new schools approved

• 1979–80 (Inpres 12/1979 and 6/1980): 14,000 new schools approved

By the early 1980s the vast majority of Indonesian villages had an SD Inpres, often the only formal school for miles around. Most importantly, many of the subsequent policies were building on existing needs. For example, at the first launch of SD Inpres through Presidential Instruction No. 10/1973, the 6,000 schools were equipped with three classrooms, one teacher's room, toilets, and school support equipment.

Two years later, Presidential Instruction No. 6/1975 added upon the previous progress by additionally requiring clean water supply facilities, additional teaching arrangements, as well as textbooks and children's reading books in the library.

This consistent focus meant the SD Inpres policy didn’t stagnate: instead, it evolved alongside local needs and budget realities. By layering improvements upon each other (from basic buildings to sanitation, teaching tools, and books), the program illustrates how long-term commitments work best when they are designed to adapt, not just expand.

3. Clear standardization and scale

The SD Inpres program is a great example of data-driven decision making in the public sector, because it was designed explicitly to target children who had not previously been enrolled in school. Keeping the limited budget in mind, authorities were able to use data on the number of children not enrolled in school and determine where SD Inpres would be most effective.

This was called the general allocation rule – wherein the number of schools to be constructed in each district was proportional to the number of children of primary school age not enrolled in school in 1972, then listed the exact number of schools to be constructed in each district.

The specificity of these instructions facilitated clear expectations that were to be fulfilled in each area. Additionally, the schools were standardized—same size, layout, teaching rooms—which made the rollout fast and relatively simple to monitor.

The legacy of SD Inpres

In the realm of education alone, SD Inpres led to a sharp rise in net enrollment ratio among children aged seven through 12. In fact, one report notes that in 1974, children aged between two and six years old were receiving 0.12 to 0.19 years more education, raising literacy rates nationwide.

The economic impact of SD Inpres is hard to overstate. It was the research focus of Nobel Prize-winning economist Esther Duflo in her PhD dissertation, which reported that between 1973 and 1980, up to 61,000 schools were constructed under the program. Crucially, she proved that education is directly related to economic growth – former students of SD Inpres enjoyed a 1.5 to 2.7 percent increase in wages than the previous generation, and she estimates economic returns to education ranging from 6.8 to 10.6 percent. In isolated areas, the chance to finish primary school often meant the difference between subsistence work and a paid job or civil-service employment later on.

SD Inpres set a precedent for national education policy. The idea of wajib belajar (compulsory schooling) was later expanded to nine years in the 1980s and 1990s. In fact, perhaps subsequent developments to educational policy would not have been politically or logistically possible without the base of primary schools that SD Inpres established.

SD Inpres no doubt has some flaws, but the sheer scale must be celebrated. It has given way to national educational policy as well as a game-changing academic understanding of the relationship between education and economic growth.

What does all this mean for Sekolah Rakyat?

Today, the Prabowo administration’s Sekolah Rakyat initiative is another part of Indonesia’s long journey towards expanding access to education. However, as we reflect on what made SD Inpres work—clear funding priorities, long-term commitment, and data-driven implementation—the real question becomes, can Sekolah Rakyat follow through?

So far, maybe not so much. Education watchdog JPPI reported that there was mass quitting amongst Sekolah Rakyat teachers due to “fundamental” planning flaws. Student activists also warn that the program will require a huge amount of funding, yet so far does not have a clear plan for integration with existing systems. These are not just random mistakes – they reflect key knowledge gaps in sectors where SD Inpres won.

When bold new programs are launched today, knowing what worked in previous historical reforms (in this case, SD Inpres) allows us to know what to look for, and what not to repeat.

If Sekolah Rakyat seeks to succeed, it must learn from the successes of earlier efforts. Times have changed, but the fundamentals remain: strong planning, sustained political will, and policies rooted in data. Most importantly, reform requires much more than a vision.

If you’ve come to this point, you’ve read the question we posed in our first takeaway: If Indonesia were to have another influx of cash, what should we do with it? Who would you trust to advocate for this cause?

We thought it could be interesting to hear what you think - perhaps it could also be a prompt for us to write our next edition.

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If you’ve been following the news, you’ve probably heard about the speculated Grab-GoTo merger, a potential 7.1 billion US dollar deal that would unite two ride-hailing giants and reshape everyday life for millions of Indonesians. Beyond sheer value, the deal has revived old questions: is Indonesia’s decades-old competition law still capable of protecting fair play for consumers and businesses in today’s economy?

The uncomfortable truth is that Indonesia’s Law No. 5/1999 has struggled for years to keep markets open and fair. The digital economy didn’t cause these cracks, it simply made them impossible to ignore. Platform dominance, data-driven markets, and algorithmic pricing now test the limits of a law written long before these realities existed.

In this edition of The Reformist, we are taking a closer look at why our current antitrust law failed to tackle today’s rapidly growing digital-era challenges:

• The weak enforcement of the law,

• The missing digital economy regulatory framework, and

• The lack of public awareness and political momentum to update the law.

Towards the end, we will also discuss what should change—what reforms should be done—in the upcoming revision of the competition law.

However, to understand both the criticism and necessary reforms to our antitrust law, we have to first delve into how Law No. 5/1999 came to be.

A law born out of crisis

Competition law (or antitrust law) exists to promote fair competition, prevent monopolies, and protect consumers by guaranteeing choice, reasonable prices, and product quality.

Indonesia’s Competition Law No. 5/1999 itself emerged as a response to the 1998 Asian Financial Crisis. In an era marked by monopolistic practices under the New Order regime, the law was seen as a crucial reform to level the playing field. It was once a bold step forward. Back then, it helped unlock foreign investment — from around US$1.9 billion in 2004 to over US$8 billion the next year.

It also established the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha, or KPPU) as an independent authority to prevent abuses of anti-competitive conduct such as restrictive agreements and market dominance. Under the law, the KPPU can impose fines of up to 50% of relevant profits and 10% of relevant parties’ turnover during the infringement period. Additionally, KPPU can declare agreements void, award damages, and order business actors to cease practices that infringe upon Law No. 5/1999.

Yet 25 years on, the landscape has shifted. Our economy is now digitized, decentralized, and increasingly dominated by ecosystems where a handful of players control data, platforms, and consumer access all at once. Meanwhile, the legal tools we have to deal with this new reality remain stuck in the past.

Let’s take a look at the problems:

Problem 1: Enforcement is weak

Technically, KPPU can impose steep fines, void unfair agreements, and order businesses to stop anti-competitive practices. But real-world enforcement has proven far weaker. Here are some problems:

First, overlapping mandates and legal contradictions weaken the KPPU’s rulings. For example, in April 2021, the Supreme Court overturned the KPPU sanction (fines totaling IDR 49 billion) on Grab Indonesia, which had been fined for giving a leasing company special terms that harmed competitors. This case was seen as a “victory” for Grab; underscoring limits to how KPPU can exercise authority in this digitized economy. In this sense, it is hard to deny that anti-monopoly enforcement fails in Indonesia, with legal processes stunted by unfamiliarity with complex technological knowledge.

Second, enforcement gaps keep recurring. KPPU has been releasing publications about anti-competitive practices in Indonesian industries, but there has been no further action. For example, KPPU’s own publication flags cartel-like practices in the taxi industries; wherein minimum fares were jointly set by business associations rather than regulators. While its publication identified this collusion and offered policy recommendation, it ultimately lacked the authority or tools to intervene – meaning this research just stayed intangible, with little follow up.

Problem 2: No specific regulatory framework on digital economy

Unlike the EU’s Digital Markets Act (DMA)—which specifically defines and regulates powerful digital “gatekeepers”—Indonesia’s competition law remains silent on how to tackle the unique realities of today’s digital economy.

Over the past decade, digital technologies have reshaped nearly every aspect of business. This has sparked a global wave of new rules and enforcement actions — from headline-grabbing antitrust cases against Big Tech in Europe and the US to the EU’s DMA and Digital Services Act (DSA), and new digital competition frameworks across Asia-Pacific economies. These efforts reflect a growing global consensus: competition law must evolve to address data-driven dominance, algorithmic exclusion, and hidden self-preferencing by platforms.

In contrast, Indonesia has tried to keep up through isolated actions like the Google Pay Billing investigation, the Shopee Express case, the TikTok Shop ban, and scrutiny of the GoTo merger. But the legal framework itself has yet to be modernized. There are no ex-ante tools, no platform-specific rules, and no binding guidelines to proactively govern digital conduct. This leaves Indonesia’s regime reactive rather than forward-looking; forced to chase problems after they appear instead of setting the guardrails upfront.

For example, while Law No. 5/1999 prohibits price-fixing, it does not address algorithmic collusion, where software automatically adjusts prices across competitors, evading traditional enforcement methods. As a result, algorithmic pricing practices and “autonomous” collusions are often unregulated, which would facilitate automatic price-fixing that evades traditional law enforcement approaches. This blind spot leaves space for unfair digital practices to flourish.

Basic consumer safeguards that help keep markets open are also missing. For instance, Indonesia still doesn’t have phone number portability — a simple but powerful tool that lets consumers keep their number when switching mobile providers. As a result, consumers face a hassle if they want to leave Telkomsel or other big players. The EU’s DMA explicitly bans this kind of lock-in.

These gaps mean that KPPU’s oversight remains too general for today’s digital challenges — leaving dominant players free to tighten their grip at the cost of consumer choice and innovation.

The consequences are visible. In 2019, AirAsia pulled its tickets from Traveloka, accusing the platform of giving preferential treatment to rival airlines Lion Air and Garuda. AirAsia warned that such favoritism could squeeze suppliers and limit choices for travelers — but there was no clear legal tool to address this kind of digital gatekeeping.

KPPU’s own market studies have repeatedly emphasized the risks of highly concentrated e-commerce and digital market dominance. But without updated, digital-specific powers, these warnings rarely lead to decisive action.

Problem 3: Limited awareness, weak political will

And without a clear public narrative connecting fair competition to economic growth, innovation, and everyday fairness, even a good legal rewrite risks falling flat.

For all its clear gaps, reforming Indonesia’s competition law has never been an easy sell. Public support is thin, political will is fragile, and industry interests run deep.

A major amendment was drafted a few years ago to raise fines, introduce pre-merger reviews, and add a leniency program, but it ultimately stalled. KPPU has tried to build understanding through forums and studies, but these efforts haven’t sparked real public debate. Many people still don’t see how fair competition shapes their everyday life, from lower prices and better services to new opportunities for SMEs.

Predictably, any push for reform faces quiet resistance from businesses that benefit from the current light-touch rules. For them, stronger enforcement means new constraints.

Part of the problem is structural. One reason stakeholder awareness remains low is because the benefits of antitrust law may not always be directly felt by the public. This is an example of the logic of collective action—a phenomenon wherein despite stronger enforcement preventing collusion, the advantages are dispersed across many consumers that it is hard to build widespread support. At the same time, collusive arrangements continue to substantially benefit large players.

And without a clear public narrative connecting fair competition to economic growth, innovation, and everyday fairness, even a good legal rewrite risks falling flat.

An institutional puzzle still unsolved

It’s not just the legal language that’s outdated; the wider system is too. KPPU’s mandate does not include pre-screening new sectoral rules that can distort markets. It lacks leverage over SOEs, even though they hold dominant positions in many strategic sectors. Local licensing and procurement practices can quietly undercut fair competition, yet KPPU’s reach doesn’t always extend there.

These gaps leave the regime fragmented and reactive—the kind of terrain that dominant players know how to navigate.

Good news: the bill to amend the law is now on table

Despite these challenges, momentum for change hasn’t vanished completely. The House of Representatives has now listed the revision of Law No. 5/1999 as a priority in the 2025 National Legislation Program (Prolegnas). Current proposals aim to amend the competition law so that it can be aligned with an overarching goal to facilitate economic growth and further fall under the “dynamics of competition in the digital era” worldwide.

KPPU leaders have openly warned that the law has grown “rather obsolete” for today’s economy. The KPPU chairperson raised these issues to the House and called for tangible amendments to the current competition law: clearer merger reviews, stronger authority to tackle digital-era dominance, and better tools to close enforcement gaps.

In addition, the government seeks to increase funding for KPPU operations to strengthen it, so that KPPU can be more effective in supervising business competition for the digital era. A level playing field is important to ensure a healthy business climate, which in turn was important for a healthy national economy.

Furthermore, Indonesia’s aspiration to join the OECD gives the effort new teeth; because in the OECD club, credible, modern competition policy is not a box to tick, but a baseline for membership.

Other countries aren’t standing still. Australia, Singapore, South Korea, Japan — they’ve all modernized their frameworks to keep up with digital power plays and ecosystem dominance. The EU’s DMA has become a global benchmark. Meanwhile, Indonesia’s market credibility risks falling behind if it keeps using outdated tools while promising modern governance.

Whether this revision finally delivers where past attempts fell short will depend on more than new clauses on paper. It will require real political backing, enough budget to match ambition, and a clear public narrative that fair competition is not just a legal matter — but a foundation for a healthier, more dynamic economy.

What reform must be delivered?

Reform cannot just mean tweaking a few articles. It must close digital loopholes and strengthen merger review. It should clarify how KPPU works alongside other regulators while giving it modern tools; from stronger investigative powers, raids, and a functioning leniency program to real authority to tackle algorithmic collusion, hidden price-fixing, and platform self-preferencing that quietly squeezes out smaller players.

It also means ensuring KPPU has the funding, data capabilities, and specialized talent needed to handle complex rapid-evolving cases, not just publish reports that go nowhere. Sectoral ministries, local governments, and SOEs must be brought under clearer rules so they can’t quietly block fair play through loopholes or special treatment.

Equally important, reform needs a story people can believe in: that fair competition isn’t just extra red tape — it’s a safeguard that keeps prices fair, forces big players to keep improving, and gives SMEs the chance to grow without being edged out by secret deals or closed ecosystems. A clear public narrative helps build the broad base of support needed to keep momentum alive — so stronger rules don’t die quietly in committee, but deliver real impact in the daily economy.

A wake-up call—and a test

The digital economy didn’t break our competition law—it forced us to see its cracks clearly. Stronger competition and vibrant innovation already exist in Indonesia, but they shouldn’t have to fight uphill against outdated rules. Getting this reform right is how Indonesia proves to the public, investors, and businesses it’s serious about fair play, credible markets, and long-term growth in a digital-first age.

The world is moving. Our entrepreneurs and new players are moving too. The only question is whether we’ll match their pace—or let an old framework hold them back.

Writer, Researcher:

Co-writer:

Editors: ,

Expert Advisor: , M. Rifky Wicaksono

Did you know that two weeks ago (May 19-23) was Open Government Week? If not, you’re not alone—most Indonesians probably didn’t either. And that’s the problem. Indonesia was once a loud, proud founding member of the Open Government Partnership (OGP), a global push for transparent and accountable governance. But today, our voice in that movement has gone quiet.

It’s more than just a missed calendar date—it’s a warning sign. Open Government’s mandate upon birth to build a government that citizens can trust should’ve continuously propelled Indonesia’s young democracy to new heights. But more than a decade later, the momentum has stalled. The question is: has trust stalled with it?

In this volume of The Reformist, we ask where Indonesia’s open government ambition really stands—and we don’t just mean the cosmetic kind, but the kind that eradicates corruption, earns public trust, and creates policies that work.

The question remains: are we now living up to the reformist ideals we helped launch?

What Open Government is all about

Before everything, let’s first talk about what Open Government is. The concept advocates for the re-thinking of public information management, so that governance is more transparent, inclusive, and accountable through encouraging reform in key policy areas, including but not limited to anti-corruption, civic space, climate, digital government, justice, and public participation.

It’s important to note that despite the overlap that often occurs between open government initiatives and digitalization, open government is not simply about going digital.

Without the transparency, accountability, and public participation that is advocated for by open government, a state would face:

• increased struggle with corruption,

• lack of trust in government institutions, and

• inefficient policymaking.

To put it simply, open government builds a culture of transparency that facilitates citizen commitments.

You may be surprised, but Indonesia is not only part of large-scale efforts to push for open government, but also a founding member of a key initiative to encourage it globally. In 2011, under the SBY administration, Indonesia joined seven other founding governments—including the Philippines, Brazil, and the UK—to launch Open Government Partnership (OGP). The partnership works to secure commitments from both national and sub-national governments to promote initiatives that enable access to information, civic participation, and public accountability.

Does OGP work?

Has OGP been showing results or is it just another global initiative that never made it out of the blueprints? In a report published to convince skeptics (that could be you!) that Open Government is indeed beneficial, OGP showcased some key success stories from its member states’ initiatives.

• Public engagement improves public service delivery: In South Korea, the metropolitan government in Seoul began publishing up-to-date information about the water quality being supplied into people’s homes. This increased citizens’ trust and contributed to an increase of 20% in tap water consumption.

• Civic monitoring prevents corruption: In Côte D’Ivoire, the Ministry of Interior and Security established local anti-racketeering committees made up of civil society, government, and policymakers. The goal is to hold information campaigns to educate the public, identify sectors most affected by racketeering, and involve citizens in monitoring extortion and illegal activity.

• Open procurement saves public money: In the Philippines, the Department of Education monitored the full textbook procurement cycle to detect and prevent corruption. This shortened the bidding process by half (24 to 12 months), and cut the price of textbooks by 40%, resulting in savings of approximately US$1.4 million. It also identified and replaced more than 60,000 defective textbooks, and ensured the delivery of over 750,000 textbooks.

How are things looking at home? Our commitments to OGP

Throughout the SBY administration, the Indonesian government seemed invested in encouraging initiatives for open government. Under SBY, Open Government Indonesia was set up under UKP4, or the President’s Delivery Unit for Development Monitoring and Oversight.

In 2008, Indonesia passed the Public Information Disclosure Law (No. 14/2008), establishing the right of every citizen to access public information. In principle, this law has already backed our alignment with OGP, but SBY formalised our commitment through the Presidential Decree No.13/2014. While the Decree does not establish any enforceable framework or funding for open government initiatives (OGI), it highlighted that the Partnership sought to “increase transparency, public participation, and accountability” in Indonesia.

Since then, Indonesia has created seven National Action Plans (NAPs) comprising 159 commitments that cover OGP’s key policy areas discussed above. Some facts about NAPs:

• NAPs are co-created every two years and informed by both government agencies as well as civil societies.

• The Plans should be informed by experiences from its predecessor, and recommendations from the Independent Reporting Mechanism.

• Each NAP contains a varying list of specific commitments that align with the aforementioned OGP policy areas. For example, in the seventh NAP (2022-2024), Indonesia listed 15 commitments that fall under six policy areas, which were:

  • Anti-Corruption and Budget Transparency,

  • Civic Space and Democracy

  • Inclusive Public Services

  • Access to Justice

  • Gender, Disability, and Social Inclusion

  • Energy, Environment, and Natural Resources

Did any of these action plans ever materialise?

Indonesia actually made notable progress in our main commitments for the 2020-2022 NAPs:

1. Election data is now integrated, accessible, and analyzable… or is it?

The sixth NAP (2020-2022) resulted in the open data portal (opendata.kpu.go.id) by the Election Commission (KPU). This was part of a larger API for open voting systems, and integrated the Voters List Information System, Candidate Information System, Political Party Information System, and Recapitulation Information System for public viewership. According to the Association for Elections and Democracy (Perludem), the portal reflects some open data principles by ensuring that data can be analyzed, not under owners’ control, and is accessible at all times. Upon release, it was noted that the portal needed to maintain its data quality, improve navigation from the main KPU website, and fix periodic outages.

Editor’s note: At the time of writing, The Reformist team tried to see if the portal is now any better. We started from KPU’s main website to check if navigation is now improved (unfortunately, it’s not; we couldn’t find any visible link in the navigation bar). So, we typed the portal’s address into the search bar. The portal took forever to load; when it did load, datasets were nowhere to be seen (outage still happens; or user experience is just bad). Consequently, we couldn’t check if the data quality is in fact maintained.

2. Rampant graft cases pushed open contracting for procurement

Recognizing that 64% of corruption cases in 2019 involved public procurement (resulting in annual losses of up to four billion USD), the 2020-2022 NAP sought to increase the transparency and accountability of government procurement processes through open contracting. The government partnered with the National Public Procurement Agency (LKPP) to adopt the Open Contracting Data Standard (OCDS) to make procurement data more traceable from every state so that civil society groups could monitor projects more effectively. The project provided an important legal framework for open contracting, but had limited success.

3. LAPOR! platform built to improve public services, but usage is low

The government is committed to improving access to high-quality public services via digital innovation, such as the development of LAPOR! or the national public complaints online platform, an integrated complaints management system that enables citizens to report public service issues that have been implemented to reach over 500 regional governments. Similarly, the commitment led to the revitalization of the National Public Service Complaint System (SP4N). However, reports generally state that the usage level of SP4N-LAPOR! is relatively low.

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The initiatives above are a glimpse into how open government initiatives can positively impact both trust in public institutions as well as facilitate better policymaking that is supported by clear implementation.

However, distinct challenges still exist. Let us illustrate a stubborn challenge from our long fight to tackle rampant corruption through the case of beneficial ownership. What is that—and what does it have to do with open government?

Tell us who actually benefits from a company, so we know who to hold accountable

Under the Anti-Corruption policy area commitments, Indonesia has a particular focus on promoting the transparency of beneficial ownership. The term refers to the actual persons who ultimately own and benefit from a company—even if this ownership is exercised through an intermediary. In this sense, company ownership is legal ownership, but does not necessarily identify the person who benefits from the ownership. Beneficial ownership is the new form of legal entity ownership that extends beyond legal documents.

Collecting and publicly disclosing beneficial ownership data can help track money laundering, conflicts of interest, improperly awarded government contracts, and tax evasion, among others. Quite simply, knowing who ultimately benefits from a company can also help to identify responsibility for other violations of the law.

A particularly famous case that emphasizes the importance of beneficial ownership transparency is the Panama Papers; a leak of 11.5 million files from one of the world’s biggest offshore law firms. The scandal led numerous governments announcing that they sought to enable increased beneficial ownership transparency, so that beneficial owners could be better-identified.

The issue is so distinct in Indonesia that regulatory steps have been taken, including through Presidential Regulation No.13/2018. Under the Regulation, the government sought to build a centralized beneficial ownership registry under the Ministry of Law and Human Rights. However, only 29% of all registered entities had filed their beneficial ownership information by August 2022. To boost capacity and align with global best practices in the extractives sector, Indonesia joined the Opening Extractives program built by both the Extractive Industries Transparency Initiative (EITI) and Open Ownership (OO).

A key outcome of Indonesia’s latest OGP action plan was to make the beneficial ownership registry publicly available, which occurred through launching an open portal that civil society advocates hailed as “substantial progress”. With this new registry, any user can query beneficial ownership information directly, rather than paying fees for a formal request.

However, there remain some issues.

Some details (e.g. foreign owners) might still be redacted under pending regulations, poor searchability means people may not easily access relevant information, and imperfect verification processes may mean the data is questionable at best. Another key concern is that the Regulation for beneficial ownership only covers domestically-registered entities, meaning foreign-owned and offshore entities may not be noted down.

OGP pushes for transparency and Indonesia is often included in the conversation, but the frameworks we implement are rarely updated. By mid-2022, approximately one-third of corporations had disclosed beneficial ownership information. But, it still did not include information on most Indonesian corporations. There was also no process to verify data through financial transaction data; and the records were not searchable by owner names—only full company names.

Indonesia Corruption Watch (ICW) noted that the beneficial ownership regulation above lacks enforcement, has unclear legal norms, no sanctions, and no public registry. This means that while we have made formal commitments, they have mostly manifested as policy aspirations rather than institutional reforms.

What’s stopping Open Government from being the best reform ever?

As perhaps obvious, the continuity of policymaking beyond a single administration (much like many other reforms we have covered) continues to be a key point of struggle for ensuring long-term change.

As touched upon earlier, the UKP4 coordinating agency under SBY was dissolved after 2014. This meant that many early initiatives lost momentum, including open government initiatives. Plus, the lack of legislative baseline means the whole initiative is sidelined by new leaders.

Additionally, the implementation of open government initiatives faces various technical challenges. There has been considerable progress in creating OGP initiatives in Indonesia, but they often lack updates or standardized formats that allow long-term progress tracking, much like the beneficial ownership dataset above.

For example, Satu Data Indonesia (SDI) launched in 2019 for seven pilot regions—the Provinces of West Nusa Tenggara, Riau, and East Java; the City of Semarang; the Regencies of Banggai, West Sumbawa, and Brebes—with limited success. Not only did regional datasets differ thematically from national-level ones (which means that they’re not interoperable), but three out of seven regions were still awaiting technical guidance by the end of the implementation period.

Interestingly, capacity building and assistance from the SDI Secretariat faced challenges at the city-level, because the SDI scope was initially limited in implementation to provincial governments. Additionally, struggles related to funding and central-to-local government communication deeply limited the effectiveness of SDI’s roll out.

Synchronizing information is similarly difficult. In the case of quantifying rice production for SDI, different government authorities (including the Ministry of Agriculture, Ministry of Trade, and the Bureau of Logistics) produce data on rice production. The data is not integrated, and thus cannot be used for joint planning, and produces redundant datasets that pollute rather than inform the internet.

The general public knowledge of open government initiatives also poses a significant issue. Evaluators have stated that “widespread public engagement remains difficult” and OGI must engage a broader range of stakeholders in developing commitments. This low visibility means that feedback loops are weak (or perhaps non-existent): public complaints submitted via platforms like SP4N‐LAPOR! are negligible relative to population, and follow-up is inconsistent.

As a result, the utility of SDI remains questionable. Without machine-readable formats, compliance with open data standards, or clear pathways to public readership, there is little practical effect to having the information online.

As a founding member, is this enough?

Obviously, no. The goal is clear, but goals and pledges alone won’t move mountains. Indonesia has the right ideas, but without sustained leadership, integrated data systems, enforceable rules, and true civic partnership, these remain half-hearted measures with little discernible impact.

If open government is to survive beyond speeches and meetings, it will need to be anchored in the system, with long-term commitment between presidential administrations and government agencies.

There has no doubt been a regression to the state’s commitment to OGP throughout the past few years, from prioritization during the previous administration to today’s lackluster engagement. In this sense, it is crucial to call for innovative approaches to policymaking that facilitates democratic governance.

Open Government has now extended into parliament-level processes—Indonesia was, once again, in the frontline

Indonesia became the first and only country in Asia to date to have a formal Open Parliament programme led by DPR RI. The initiative produced two action plans between 2018 and 2022, but then went… quiet. Most recently, the Committee for Inter-Parliamentary Cooperation of DPR RI began to revive the Open Parliament initiative through merging it with OGI.

However, as we have seen time and time again, a fancy initiative by name alone does not automatically lead to clear results. Clear achievements in open governance require long-term commitment, sustainability, and strong political leadership that actually wants to reform policymaking processes.

In the meantime, civil society organizations can (and should) step up. The Bijak Demokrasi secretariat—a dear part of our family at Think Policy—have recently launched Bijak Memantau. It’s a platform that facilitates your curiosity to understand different issues, monitor legislation, and keep political figures accountable—sounds very much in line with the spirit of Open Government, don’t you think? With your help, we’re working to be a part of a larger movement for better governance, starting with Bijak Memantau.

Tell us more…

Have you had experiences with Open Government Indonesia—whether in the workplace or beyond—that you’d like to share with us? Comment below or write to us at socmed@thinkpolicy.id.

Writer/Researcher:

Editor: , ,

Expert advisor: Ravio Patra