A livestream on the Presidential Secretariat’s YouTube channel was stopped abruptly after President Prabowo Subianto, in a meeting with Chamber of Commerce (Kadin) members at the State Palace on July 31, mentioned that he had heard that Iran possessed nuclear weapons. He went so far as to speculate that Saudi Arabia, the UAE, Qatar, and Egypt would likely seek them too. These off-the-cuff remarks he clearly had never run past anyone, prompting the technical team to cut the livestream to show a government ad and remove the segment from its official archived recording.

Within the next few days, the Iranian Embassy in Jakarta issued a formal statement denying the allegation on Instagram, insisting the country has “never pursued the possession of nuclear weapons.” Analysts pointed out that the unverified claim parroted allegations historically used by the United States and Israel to justify military posture, directly contradicting findings from the International Atomic Energy Agency (IAEA), which has found no evidence of a coordinated Iranian weapons program.

Prabowo did hedge his claim in that meeting by stating “it is said that [Iran has nuclear weapons],” but a head of state floating nuclear rumors to a room full of businesspeople fails to register that his “casual” remarks could instantly propel a diplomatic nightmare.

A pattern of “errors”

It is not the first time Prabowo’s “slip of tongue” has outrun diplomatic restraint.

In June 2023, while serving as Defense Minister, Prabowo delivered a presentation on Indonesia’s defense concept called “Trisula Perisai Nusantara” or the Nusantara Shield of Trident. He displayed a slide showing the 300-kilometer reach of Indonesia’s ballistic missiles, explicitly mapping Singapore, Australia, and the Philippines within the targeting radius.

Publicly diagramming neighboring partners within your strike zone is precisely the kind of imagery ASEAN foreign ministries spend decades trying to avoid. Broadcasting visual maps that imply neighboring partners sit in your crosshairs sends a tone-deaf message: we could hit you if we wanted to.

The thread connecting the missile map to the nuclear remark is a disregard for the basic mechanics of global statecraft, in which a single phrase alters deterrence, triggers formal inquiries, and demands immediate damage control.

Prabowo is the foreign policy

Prabowo has made it quite clear that Indonesia’s international posture is run by him and him alone, effectively sidelining the diplomatic bureaucracy and bypassing the institutional checks built into the Indonesian Foreign Ministry.

But if one insists on playing the role of chief diplomat and taking full ownership of the nation’s foreign affairs, one needs to actually act like one, which means exercising basic diplomatic discipline, exercising restraint, and watching every single word that one uses in formal meetings.

There is no walking back an offhand comment once a foreign embassy is forced to issue a formal denial and international observers begin questioning why the president’s information conflicts with international atomic inspectors. In global politics, “unfiltered” is synonymous with “reckless.” Clumsy commentary risks alienating strategic partners, entangling Indonesia in foreign disputes, and eroding Jakarta’s reputation as a dependable, rational mediator.

Two things to course correct

We are not saying Prabowo should cease being an active and hands-on leader on foreign policy. Instead, we believe he should re-establish basic operational discipline to protect the country’s strategic interests.

First, the president needs to empower and “reintegrate” with the Foreign Ministry.

The ministry must have a real seat at the table before the president delivers speeches touching on foreign militaries, nuclear programs, or contested territories; not afterward, when the job has shifted to damage control. The administration must return institutional advice and diplomatic vetting not as bureaucratic hurdles but strategic assets.

Second, Indonesia must institutionalize speech discipline.

Someone close to the president must be able to intervene before he walks on stage, ensuring that unvetted lines about foreign weapons programs do not make it into strategic or formal speeches. When discussing sensitive international affairs, adhering to prepared remarks and reading off the prompter is standard operational discipline practiced by world leaders to safeguard national standing.

Personal charisma has its place in global governance, but it must be anchored by institutional rigor. That is the difference between a leader who improvises with impunity and one who gets to keep improvising because he is disciplined about where he does it.

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

Write to us: connect@thinkpolicy.id

Public sector reform in Indonesia often seems like a myth. Yet, true reform occasionally takes place, as we’ve seen in Bank Indonesia (BI) under Perry Warjiyo’s leadership. When he exited the governor post on 25 July after 8 years, the central bank bid farewell to one of its most consequential technocratic leaders.

His early departure comes as a shock, though it should not be surprising considering the familiar political theater. In May, a member of parliament demanded Perry’s resignation in a hearing amid volatile global markets and a plummeting rupiah. He was a convenient scapegoat, but currency fluctuations — driven by global capital flows and by investors’ trust — are not personal failures of the central bank governor.

But history will judge Perry not by the daily exchange rate ticker, but by the institutional resilience Bank Indonesia strengthened during his tenure.

The stability we took for granted

BI’s primary mandate (at least until the passing of the recent P2SK law) is very simple: to maintain the stability of the rupiah’s value, or to keep inflation under control. Under Perry’s watch, this mandate was executed with a masterclass in quiet discipline.

Think of the shock from the Covid-19 pandemic. Indonesia managed to navigate the storms of fractured global supply chains and disrupted economies without spiraling into hyperinflation. Through calculated measures, BI kept the macroeconomic ship upright. For instance, it successfully balanced the “burden-sharing” mechanism with the Finance Ministry without undermining their independence.

The political dividends of this stability are often underestimated. Much of the enduring public approval enjoyed by the Jokowi administration can be traced directly to kitchen-table economics: that ordinary citizens could still afford basic goods.

Contrast this with the political turbulence seen in Western democracies, such as the United States, in which the Biden administration suffered severe electoral and public approval battering primarily due to raging post-pandemic inflation, which eventually led to the second election of Donald Trump.

In Indonesia, consumers were largely spared that trauma. BI under Perry left the economy unscathed, proving that prudent monetary management is the ultimate social safety net.

The digital payments revolution

If keeping inflation under control was the bare minimum expectation for a competent central bank governor, the true and indelible legacy of BI under Perry’s leadership lies in our digital payments infrastructure.

For decades, developing countries have remained digitally “colonized” by foreign financial gatekeepers. Over the past decade, Bank Indonesia increasingly treated payment infrastructure as strategic national infrastructure rather than simply financial technology. The National Payment Gateway (GPN), for example, reflects that long-term institutional vision. While the GPN was conceived before Perry Warjiyo took the helm, it was under his tenure that the initiative was institutionalized into a nationwide payment backbone, keeping domestic debit transactions within the country and reducing reliance on international payment networks such as Visa and Mastercard.

The strategic foresight of this move cannot be overstated. One only needs to look at Russia — where Western sanctions abruptly severed citizens from international payment rails overnight — to realize how vulnerable a digitizing nation is without domestic redundancy. This means Indonesia built its own fire escape before the fire even started.

Then came the retail payment system BI-Fast and Standard National Open API Payment (SNAP), which systematically lowered friction, driving down transaction costs, and knitting a fragmented archipelago into a real-time financial ecosystem.

Yet, the crown jewel of this revolution is obviously the Quick Response Code Indonesian Standard, or QRIS.

In the early days of the digital wallet boom, private sector giants like GoPay, OVO, and DANA each introduced their own proprietary QR codes, threatening to fracture the market into competing walled gardens. The masterstroke of BI under Perry was not inventing the QR payment, but excellent regulatory coordination. QRIS transformed a chaotic corporate race into a unified public utility.

Today, QRIS bridges the entire economic spectrum: it powers high-end retail boutiques just as effortlessly as it empowers street-side bakso vendors. Adoption has scaled to such a degree that urban discourse has fundamentally shifted. We are no longer debating how we might expand financial inclusion to small vendors. We are now debating whether vendors should be allowed to only accept QRIS and not cold hard cash. This shift was not an accident of the free market. It was engineered through deliberate, long-term regulatory orchestration by BI under Perry’s leadership.

A reformist’s legacy

As Perry Warjiyo exits the central bank, he leaves behind a large pair of shoes to fill. He proved that a state institution can be both fiercely disciplined and radically innovative, defending the citizens’ wallets from global crises while aggressively launching the nation into a cashless future.

Amid the noise of political grandstanding and short-term currency jitters, the broader picture is crystal clear: Indonesia’s financial resilience today is built on the foundations he laid. BI under his leadership offers a rare example of reformist governance in practice. In a political environment often consumed by short-term pressures, that may ultimately be his most enduring contribution.

When Lee Kuan Yew set out to build modern Singapore, he didn’t start with tax incentives or infrastructure. He started with the legal system. No investor, business, or citizen trusts a state where enforcement depends on political patronage or executive whim. Legal certainty wasn’t a byproduct of stability for Singapore, it was the precondition for both.

Indonesia’s official creed of course is that we are a negara hukum, a rechtstaat, a constitutional state governed by law. The Febrie Adriansyah affair says otherwise. What Tempo’s Bocor Alus reporting describes isn’t a rechtstaat at all, but a machtstaat or power state operating in plain sight: legal status negotiated behind closed doors, law enforcement agencies acting as rival fiefdoms, and the president stepping in to insulate his own people from accountability.

Febrie, until recently head of the Attorney General’s Office (AGO) for extraordinary crimes (Jampidsus), came under police investigation for alleged bribery and money laundering connected to the Asabri and PLN coal procurement cases. Police seized 74 kilograms of gold and nearly half a trillion rupiah in cash. That should have been the start of a straightforward prosecution. Instead it set off a scramble to manage the politics before the law could catch up.

Tempo’s reporting lays out the mechanics: Defense Minister Sjafrie Sjamsoeddin and other insiders lobbying President Prabowo Subianto directly, trying to keep Polri from naming Febrie a suspect, or at least to move the case back under the Attorney General’s own roof where it could be handled more quietly. Tempo also reported that businessmen linked to the case were approached to claim the seized gold as their own, a way of pulling the evidence out of Febrie’s orbit without anyone having to explain where it actually came from.

And eerily, what actually drove the president’s involvement wasn’t a concern for the investigation’s integrity but desire to keep the story from becoming political noise, or kegaduhan.

The people behind criminalizations

We’ve written before about how prosecutorial power in Indonesia gets aimed selectively at business and public officials alike. This case shows where that architecture breaks down: the same agency wielding those tools against everyone else claims the same informal immunity the moment its own leadership is the target.

Part of what makes that double standard so galling is how aggressively the AGO, and more specifically the Jampidsus office has been willing to stretch the law when the target is someone else. Articles 2 and 3 of the corruption law were written around the idea of state loss, the kerugian negara. In recent years, prosecutors from the AGO office have leaned on a reading loose enough to bring charges without much more than a policy decision that went badly or a business call that, in hindsight, cost the state money. Actual enrichment, a bribe, a kickback, a diverted asset, has become almost optional. The mere existence of a loss, however indirect or contested the accounting, has been enough to build a case on.

That’s the same expansive reading that turned a business-judgment dispute into a headline corruption verdict, and it’s the same one that keeps company executives negotiating with the AGO rather than the courts, because the line between a bad deal and a crime has gotten so blurry that nobody wants to test it in front of a judge. When the standard for what counts as corruption is this elastic, the agency applying it holds enormous discretion over who gets charged and who doesn’t.

And this is where the Febrie case cuts deepest. If the unit running these prosecutions is itself compromised, the public has every reason to look back at Jampidsus’s own high-profile arrests. Was that businessman charged because the evidence held up, or because he didn’t funnel enough gold to Febrie’s acquaintances? An agency running enrichment cases on a loose reading of the law loses all credibility to do so the moment it turns out the people bringing those cases were taking gold themselves.

We need to clean house

Fixing this isn’t a matter of reshuffling personnel or issuing a statement. The most basic problem is structural: we can’t expect the AGO to police itself, and right now that’s effectively what’s happening whenever the target is one of its own. If Jampidsus is compromised, that should be a KPK case, not an internal AGO matter, the same way we wouldn’t ask a police precinct to investigate its own commander for taking bribes.

What this actually calls for is a president willing to clean house, starting with Jampidsus itself, and treat legal certainty as something worth more than avoiding a bad news cycle. Prabowo built his campaign on promises of law enforcement without fear or favor. This is the test of whether that meant anything, or whether “no fear or favor” stops the moment the favor in question is his own.

Prabowo has set his sights on 8 percent economic growth. That number doesn’t happen without investors trusting Indonesia’s legal system enough to bet on it for the long haul. Unless legal reform becomes something the president takes as seriously as the growth target itself, the only 8 percent he’s likely to hit is his approval rating.

Back to Mr. Lee, he decided that Singapore would keep the Judicial Committee of the Privy Council in London as its final court of appeal long after independence to give “foreign investors a guarantee of impartiality that local courts alone couldn’t offer yet”. We are not suggesting Indonesia outsource its law enforcement or judiciary like Mr. Lee did, but we do need to do something.

Another day, another public uproar. The culprit this time is an itinerary leaked online that shows a plan for Public Works Minister Dody Hanggodo to visit New York, United States. What upset the public, however, was that his wife and daughter were on the official entourage list — and that the timing was suspiciously aligned with the final matches of the World Cup.

The ministry has clarified that the minister’s wife and daughter were included in the list for visa purposes and that no public funds were to be used for their trip. After the leak went viral, however, the entire excursion was canceled.

But the story didn’t end with an apology to taxpayers, a scrutiny of travel budgets, and a revised code of ethics. Instead, the ministry leadership took a more vindictive turn by asking, “Who’s behind this leak?” and went on to say that if they found the leak was internal, they would reprimand the culprit because “the letter wasn’t meant for public consumption.”

Within a few days, more rumors spread online that the ministry was planning waves of demotions and transfers to remote locations across the country, allegedly due to the viral case. This wave reportedly affected teams across units, including the secretariat responsible for planning the trip and drafting the document.

On 15 July, Minister Dody denied the allegation that the massive transfers were due to the leaked document, though his reasoning was unconvincing. “Transfers are no big deal. I have 38,600 employees; why can’t they be transferred?” he told the press.

Interestingly, there were earlier reports that Secretary General Apri Artoto, who told the press that the ministry would find and punish the culprit behind the leak, was among those affected and is reportedly waiting for his transfer to Papua. But an internal Public Works Ministry source told the news site Suara.com that this wasn’t true and that the mass transfers were a routine reshuffling unrelated to the document leak scandal.

It’s true, transfers could be routine, but the suspicious timing quickly prompted public speculation.

While the issue of transfer due to the leak remains unconfirmed, the statement that the ministry will punish the whistleblower is a red flag clear enough to signal a profound institutional failure that damages the Indonesian civil service on two fronts: (1) it aggressively stifles the nascent culture of internal whistleblowing; and (2) it reinforces a toxic, Jakarta-centric hierarchy that treats the rest of the nation as a penal colony.

Whistleblowing shouldn’t lead to witch hunts

For over a decade, successive administrations have paid lip service to the ideal of bureaucratic reform. They have reassured the public that the modern civil servant is no longer a passive cog in a feudal machine, but a professional driven by public integrity, transparency, and accountability. And younger, reform-oriented bureaucrats have been encouraged to challenge inefficient practices and stand against institutional decay.

However, the recent Public Works Ministry scandal has proven those assurances to be mere hollow rhetoric.

When a single document exposing an embarrassing truth led to a witch hunt and alleged mass demotions instead of reforms, the message sent down the ranks is unmistakable: loyalty to the hierarchy supersedes loyalty to the public. If you witness waste, mismanagement, or abuse of state facilities, you must look away. To speak out is to court professional ruin.

Whistleblowing is inherently risky, but the punishment meted out here alters the calculus entirely. By allegedly enacting collective punishment, the ministry forces public servants into a defensive pact of mutual silence.

A junior officer harboring reformist ideals would no longer dare to question a suspicious procurement order or a wasteful budget allocation if the consequence is the immediate uprooting of their livelihood and family. The system has chosen to value absolute opacity over basic accountability, ensuring that future bureaucrats will choose complicity as a survival mechanism.

Threats of “remote exile” reinforce a toxic Jakarta-centric view

The second, and perhaps more insidious, consequence of this alleged mass transfer lies in its geographical symbolism. By using transfers to remote regions as an explicit tool of chastisement, the Public Works Ministry has laid bare a deeply outdated worldview: the belief that Jakarta is the apex of professional existence, and that the rest of Indonesia is a wasteland reserved for the punished.

This is not the first time political figures or institutional leaders have reinforced this mindset. The phrase “exile to Papua,” or similar threats of banishment to distant provinces, has slipped from the mouths of officials seeking to discipline errant subordinates from time to time.

Jokowi-era Social Affairs Minister Tri Rismaharini, for instance, notoriously threatened to banish incompetent officials to Papua. This is a “habit” that undermines every single policy initiative aimed at regional equity and decentralization.

One administration after another has frequently promoted the narrative of an Indonesia-centric future. Billions of rupiah are funneled into infrastructure projects, regional connectivity hubs, and digital access for outer provinces under the guise of leveling the playing field. Yet, the moment an internal crisis occurs in the capital, the outer regions are instantly weaponized as geographical punishments.

This practice is an insult to the citizens living in those provinces. The communities in remote parts of Sumatra, Sulawesi, Kalimantan, Nusa Tenggara, Maluku, and Papua deserve the highest caliber of civil servants — professionals who bring dedication, resources, and a genuine mandate to build the regions. They do not deserve a disgruntled cohort of Jakarta exiles whose presence is the direct result of a political purge.

Furthermore, this dynamic perpetuates a toxic career trajectory within the bureaucracy. It solidifies the idea that a posting outside the capital is a mark of failure or disgrace, rather than a crucial step in nation-building. If the state itself treats the archipelago as a hierarchy of privilege with Jakarta at the center, it cannot expect its brightest minds to willingly dedicate their talents to the periphery.

Set your priorities straight

The worst thing that this scandal exposed is how the administration has treated the exposure of the problem as a far greater transgression than the problem itself.

Let us be completely clear: the fundamental issue was never the leak. The document in question did not compromise national security, nor did it expose sensitive state secrets. It revealed a planned allocation of public funds for an international trip that lacked a clear, verifiable public benefit. A trip that was canceled the moment it faced public scrutiny.

The cancellation itself is an admission of guilt. If the trip were truly essential to the functions of the Public Works Ministry, the ministry would have defended it with hard data and clear objectives. But they didn’t, simply because they couldn’t.

Thus, the problem is, and always has been, the persistent culture of wasteful, non-essential official travel that treats the state treasury as a personal travel agency.

While the ministry has said that the document is not for public consumption, the public absolutely deserves transparency about how, why, and where their tax money is spent.

The individuals who exposed this attempted misuse of public funds actually performed a valiant public service. To punish them for this exposure is an act of blatant misdirection; an attempt to shift the focus from a minister’s poor judgment to a civil servant’s supposed lack of loyalty.

We call on President Prabowo and the Administrative and Bureaucratic Reform Ministry to step in and scrutinize whistleblowing systems across ministries and other government bodies. An independent investigation must be launched to ensure that no whistleblower’s career is threatened after speaking up against maladministration, just as the Public Works Ministry leadership pledged to punish whoever leaked the itinerary document. Punishing the messengers while leaving the systemic issue unaddressed is a cowardly solution that does nothing to restore public trust.

To our civil servant friends who still believe in the promise of a clean and accountable Indonesia, do not let this display of institutional bullying convince you that silence is your only option; our opinion columns and editorial desk will remain an open and secure platform for anyone who wishes to anonymously blow the whistle on corruption and mismanagement.

We commit our editorial resources to thoroughly verify your information and will exercise our Right of Refusal to guarantee your anonymity under the law, ensuring that while your superiors may have the authority to disrupt your career, they do not have the power to control the truth. Reach out to connect@thinkpolicy.id.

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

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

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

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

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

The danger of undermining the roles of commissioners

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

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

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

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

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

Competence is critical for a commissioner role

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

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

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

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

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

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

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

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

A glaring contradiction

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

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

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

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

Are we paying commissioners too much?

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

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

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

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

Bring back meritocracy to the boardroom

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

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

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

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

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

Criminalization of the Chromebook policy

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

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

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

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

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

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

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

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

The phantom enrichment

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

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

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

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

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

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

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

We have to talk about state losses

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

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

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

What’s next

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A chance to course-correct

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

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

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

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

The myth of the corrupt Chromebook advice

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

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

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

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

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

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

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

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

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

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

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

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

The chilling effect on Indonesian expertise

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

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

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

A call for a real anti-corruption drive

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

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

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

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

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

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

How does this make sense?

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

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

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

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

What deserves more attention

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

… Right?

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

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

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

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

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

Half-hearted course correction

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

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

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

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

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

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

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

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Last week, a social media post went viral after exposing a group chat of 16 law students from the University of Indonesia (UI) filled with lewd, objectifying comments about female students and teaching staff.

Shortly after, the Bandung Institute of Technology (ITB) was under fire after another viral post showed students singing ‘Erika’, a song with vulgar, degrading lyrics that has apparently been a staple on campus since the 1980s.

Has sexual harassment become normalized on campus? Or has it always been like this—and social media simply makes it easier for such cases to take a prime spot in public consciousness?

How can universities, where ethics and moral principles are taught as a mandatory course in the first year, become a fertile ground for rampant, largely unpunished sexual violence cases?

The Indonesian Education Monitoring Network (JPPI) recorded over 200 cases of violence in educational environments in January–March 2026 alone. Eleven percent of those cases occurred at the university level, and nearly half are sexual violence cases. JPPI national coordinator, Ubait Matraji, says that this shows what happened at UI is not an isolated incident but instead, a systemic phenomenon. In 2025, the National Commission on Violence against Women (Komnas Perempuan) recorded 1,091 cases of online gender-based violence (KBGO)—90 percent of which are sexual in nature.

Unfortunately, this isn’t a new occurrence. In 2019, The Jakarta Post, Tirto.id, and VICE Indonesia published a collaborative exposé dubbed ‘#NamaBaikKampus’ (‘#CampusReputation’), a jab at how many university administrators across the country actively conceal sexual violence cases to protect their so-called good reputation.

The investigation collected the data of over 100 cases of sexual violence that happened in 79 universities across 29 cities. Out of all victims that came forward, half confessed they did not file a report with the authorities. This indicates a system in which universities and the state are complicit in perpetuating rape culture by failing to set a norm that does not tolerate sexual violence.

When perpetrators of sexual violence get a slap on the wrist—or worse, get away with total impunity—the system is basically sending a message that it is okay to do it and there will be no consequences. Meanwhile, victims are afraid to report because their experience often gets denied or downplayed.

There is a real crisis: victims of sexual violence do not have a safe space where it is okay for them to speak out and file a report, whereas law enforcement operates with leniency towards perpetrators while being very strict towards victims. Ultimately, this creates a fear of ‘revictimization’.

What makes it disheartening is that sexual violence has continued to go largely unpunished even after the enactment of Law No. 12/2022 on the Crimes of Sexual Violence (UU TPKS). On paper, it provides a comprehensive legal framework that outlines a broad spectrum of sexual violence and stipulates robust provisions aimed at protecting the victims throughout and beyond the legal process. In practice, we have yet to see the law being implemented to the fullest extent possible.

According to the Indonesian Women for Justice Legal Aid Institute (LBH APIK), the police often refuse to use the full provisions of UU TPKS in handling sexual violence cases. Their monitoring shows that while UU TPKS is often invoked in the initial stage of investigations, the police would then rely on the Criminal Procedure Code (KUHAP), which treats sexual violence cases like any other criminal acts—ignoring UU TPKS stipulation for a distinct, victim-oriented evidentiary approach. This leads to sexual violence cases often being dismissed on the grounds that they fail to meet the procedural standards set by KUHAP.

But legal procedural issues are far from the only hurdle. It is the stubborn social ‘norms’ that have long normalized actions like catcalling and making objectifying comments on women’s bodies as ‘locker room talk’ or that ‘boys will be boys’. In a world where women’s perspectives are often missing in law enforcement practice and other positions of authority, it’s no wonder that victims of sexual violence are often discouraged from speaking out or filing a report in the first place.

Ironically, higher education institutions are already equipped with a progressive, victim-centered, gender-sensitive legal framework to prevent and handle sexual violence cases on campus. The year before UU TPKS was passed, the Education and Culture Ministry issued Ministerial Regulation No. 30/2021 (‘Permendikbud 30’) on the prevention and handling of sexual violence, detailing a reporting mechanism and mandating the establishment of Anti-Sexual Violence Task Forces on campus.

Former education and culture minister Nadiem Makarim, at that time, said the regulation was necessary because the Criminal Code and the Criminal Procedure Code had limitations in handling sexual violence cases. For example, the Codes only recognize rape and molestation as sexual violence. Meanwhile, he said, online gender-based violence was going rampant on campus.

Both UU TPKS and Permendikbud 30 recognize a broader definition of sexual violence—including ones typically normalized like verbal and online harassment. However, the fact that more and more cases continue happening reveals a pattern that both campus administrators and the state have failed to enforce the social norm required to create a safe environment for those most vulnerable to sexual violence.

The problem is that we know what must happen to put an end to this vicious cycle of impunity. It is one thing to have a mechanism, but a lot of work remains to foster a reliable, safe, and dignified enforcement model where victims can have trust in the system.

Law enforcement authorities can start by properly training their apparatus to understand how to handle sexual violence cases with an empathetic, gender-sensitive, and trauma-informed approach. They must also strictly punish and rehabilitate perpetrators. If not, the law will never effectively deter future offenders.

The viral UI law school case only sheds light on a system that has not batted an eye when sexual violence occurs. Leaders at the top, including the President, must take a firm stance against all sexual violence cases. Otherwise, it will only be a matter of time until the next scandal happens again. We deserve better.

Heading into the Eid al-Fitr weekend, President Prabowo Subianto held a three-hour roundtable with prominent journalists and experts covering a wide range of issues, one of which was the recently signed Agreement on Reciprocal Trade (ART).

The ART was signed just hours before the US Supreme Court ruled Trump’s tariffs unconstitutional. That ruling entirely gutted the legal basis for the US tariff regime, but Indonesia remains trapped. Because we prematurely converted our tariff rate into a bilateral treaty obligation, we locked in a 19 percent rate. Meanwhile, countries that waited or simply did nothing are now looking at rates between 10 and 15 percent.

We gave up local content policy, critical mineral export restrictions, publishing sector ownership rules, and a dozen other hard-won regulatory positions—and in exchange, we got a tariff rate higher than what countries that signed nothing are paying.

Pressed on these massive concessions during the roundtable, Prabowo repeatedly deflected with a single defense: the agreement includes an all-encompassing clause stating that commitments will be executed “in accordance with domestic laws and regulations.“ If a treaty provision conflicts with our laws, the logic goes, we are not bound by it. It sounds reasonable. The only problem: it doesn’t exist where the president thinks it does.

“In accordance with domestic laws and regulations”

The phrase does appear in the ART, but only in five specific clauses, all of them clustered in Section 5 on economic and national security cooperation. These cover things like Indonesia restricting transactions with companies on the US Entity List, adopting anti-transshipment measures, and aligning with US export controls. The domestic-law qualifier was placed there deliberately, as a concession to the fact that these are sensitive sovereignty-adjacent commitments.

It was, however, not placed anywhere near the three commitments Prabowo was asked about.

Take local content requirements, for example. Article 2.2 of Annex III reads: “Indonesia shall exempt U.S. companies and U.S. goods from local content requirements.” Full stop. If Indonesia currently has local content rules that apply to everyone—and it does—this agreement requires Indonesia to exempt American companies from them. It is not ambiguous; it’s the entire text of the clause.

The same absence of protection applies to rare-earth minerals and nickel, which Indonesia currently places an export ban on in support of our downstreaming efforts. Article 6.1 of Annex III states that Indonesia “shall remove restrictions on exports to the United States of industrial commodities, including critical minerals.” Indonesia’s downstream processing policy—the ban on exporting raw nickel that has anchored our industrialization strategy for over a decade—is indeed a restriction on exports of critical minerals. There is no domestic-law carve-out, the way the President thinks there is.

The final, and perhaps most culturally sensitive, is on foreign ownership of the publishing sector. Prabowo was asked why we agreed to remove the maximum foreign ownership regulations on media companies, which we instituted with the 1999 Press Law. Article 2.28 of the ART requires Indonesia to “allow foreign investment without ownership restrictions for U.S. investors in... publishing.” This would open up a sector we have long considered sensitive enough to protect. Again, no domestic-law qualifier appears anywhere in the clause.

He then deployed the same “domestic laws” defense when pressed on a separate clause gutting our publisher rights regulations in relation to US social media companies. The agreement explicitly dictates: “Indonesia shall refrain from requiring U.S. digital services providers (platform services) to support domestic news organizations through paid licenses, user data sharing, and profit-sharing models.“ This completely neutralizes recent national efforts to make tech platforms pay for local journalism as mandated under Presidential Regulation No.3/2024. We have long considered this sector sensitive enough to protect, yet neither the ownership clause nor the digital platform clause contains any domestic-law qualifier.

The President should know that a contractual carve-out exists where it is written, not where you wish it had been written.

Let’s not ratify this deal

President Prabowo must not ratify the agreement and return to the negotiating table. Use the time to actually read what the agreement says, identify which commitments serve Indonesian interests and which don’t, and push back on the rest. Other countries have done exactly this; Malaysia declared the agreement null and void following the Supreme Court ruling and are waiting for the US to come up with a new proposal for them. We should do the same.

How ironic it is that Indonesia holds the presidency of the United Nations Human Rights Council, setting the global human rights agenda, while back at home, a human rights activist suffered an acid attack.

Andrie Yunus, Deputy Coordinator of the Commission for the Disappeared and Victims of Violence (KontraS), is well known as an advocate and critic of military encroachment into civilian administration. Due to the nature of his work, civil society groups have renounced that Andrie’s attack was targeted and therefore can be classified as a premeditated murder attempt.

The UN secretariat’s own Office of the High Commissioner for Human Rights (OHCHR) has condemned the attack as “horrific”. This shows a jarring disconnect between our diplomatic posturing on human rights in Geneva and the bleeding reality of civil society at home.

For over two decades, KontraS has done the grueling, necessary work of documenting state-sponsored abuse and demanding accountability from institutions that prefer to operate in the dark. And for over two decades, the state has allowed a culture of impunity to choke rights defenders.

In 2004, KontraS founder Munir Said Thalib was murdered, poisoned with arsenic on a Garuda Indonesia flight. More than twenty years later, the masterminds remain untouched. The case is technically still open; the system’s way of ensuring it goes nowhere. On 3 March 2026, nine days before the attack, Andrie was one of the advocates representing the Solidarity Action Committee for Munir (KASUM) that submitted a letter to the National Human Rights Commission (Komnas HAM) to demand a resolution for Munir’s murder by bringing the actual perpetrators to justice.

Usman Hamid, former KontraS Coordinator and current Director of Amnesty International Indonesia, has faced endless death threats. Other former KontraS coordinators, Haris Azhar and Fatia Maulidiyanti, were dragged through exhausting criminal defamation trials for daring to connect a high-ranking public official to mining interests in Papua. The KontraS office has been bombed more than 3 times in terror attacks, in addition to countless acts of intimidation. And now this acid terror attack.

We cannot keep treating these attacks against rights activists as isolated tragedies. They are data points in a long-standing pattern of intimidation. When activists are threatened, sued, or physically harmed without consequence, the authorities are practically sending a clear, unofficial directive: speaking truth to power in this country carries a lethal risk, and the state will not protect you. Worse, they might be out to get you…

Andrie’s attack is clearly specific and targeted. Beyond his daily work at KontraS, he is a driving force in the Coalition for Security Sector Reform and KASUM. He spends his time fighting for actual civilian oversight of the police and military—both institutions that have historically (and fiercely) resisted public accountability. A violent attack on an advocate and pro-democracy figure committed to this specific work is never a random street crime but a calculated message.

On Wednesday, 18 March 2026, the Indonesian Military announced that it had detained four of its personnel in relation to this attack—an apparent admission that the military is indeed behind this terror attack. The four have been identified as agents of the military’s strategic intelligence body (BAIS). Separately, the Jakarta Metropolitan Police also announced that they have identified four suspects, but have not ruled out the possibility of there being more.

In line with the civil society coalition’s demand, we urge the government to establish a dedicated, independent task force to investigate this attack. We do not need another ad-hoc committee designed to quietly dissolve as the news cycle moves on. We need a transparent process with a hard mandate, civilian oversight, and actual consequences for the perpetrators.

The cost of attacking activists has remained comfortably low for decades; their masterminds have largely acted with impunity. If Indonesia wants to look the world in the eye from the seat of the UN Human Rights Council presidency, we have to clean our own house first.

In late February, white Mahindra Scorpio pickup trucks began arriving at the port of Tanjung Priok in Jakarta, the words Koperasi Desa Merah Putih (Red and White Village Cooperative, hereafter ‘KMP’) stickered across their bodies. Nobody was quite sure what to do with them. They were meant to serve some of the 80,000 KMP planned by the Prabowo administration. But most of these cooperatives did not exist in any operational sense. So the trucks were sent to military district posts to… park.

The confusion didn’t stop there. Instead, more trucks were coming: 105,000 vehicles imported from India by state enterprise PT Agrinas Pangan Nusantara at Rp 24.66 trillion. This was a strange decision disputed by many. The Chamber of Commerce asked the president to cancel the purchase. The automotive association said domestic manufacturers could have supplied them. Indonesia Corruption Watch demanded procurement documents. Even the House Deputy Speaker, Sufmi Dasco, suggested postponing the purchase.

To make matters worse, the government is not only spending Rp 240 trillion on a program villages did not ask for, but it is also doing so by bypassing the open procurement process for vehicle purchases, violating the Cooperatives Law’s principle of voluntary member financing, and seizing village funds that communities are legally entitled to control.

This pickup truck saga is more or less a miniature of the larger KMP kerfuffle: money disbursed at speed, assets delivered before the cooperative units even exist, and questions around the program treated as background noise.

Blatant misallocation of the Village Fund

KMP is the latest in President Prabowo Subianto’s portfolio of megaprojects, each sharing the same DNA: staggering scale, compressed timelines, and eye-watering fiscal commitments. What sets KMP apart, however, is where its money comes from. Not the central budget in any conventional sense, but village funds, quietly repurposed to underwrite a program that villages did not ask for and will be forced to pay for regardless of outcome.

The math is simple. Each cooperative gets a credit facility of up to Rp 3 billion, channeled through state-owned banks (Himbara). Across 80,000 units, the total financing envelope is Rp 240 trillion, roughly a quarter of all ministry spending in the national budget. Himbara provides bridging loans to Agrinas, the sole construction executor appointed by the government. Then, the Finance Ministry repays the banks at Rp 40 trillion per year over six years. The repayment source? Village funds.

In February, the Finance Ministry issued a Finance Ministerial Regulation (PMK) No. 7/2026, mandating that 58 percent of the national village fund allocation, some Rp 34.57 trillion out of Rp 60.57 trillion, go toward KMP. What remains for roads, sanitation, schools, and clean water across 74,000 villages is about Rp 25 trillion.

This is ironic because village funds were designated under the 2014 Village Law to allow communities to set their own priorities through participatory planning. But now this principle has been overridden by a central decree. What happens now—between the central government and villages—is no longer a partnership. It is requisition.

The risk compounds further down the chain. Most KMP board members have no prior cooperative management experience, no bookkeeping skills, and no business planning capacity. A study of 108 village heads across 34 provinces found that 65 percent identified significant governance gaps, with many flagging the program’s vulnerability to fraud.

So what happens if cooperatives fail to generate revenue? Villages still pay through automatic deductions from their fund allocations. The state builds, the state lends, the state guarantees, but the village absorbs the loss.

With huge funds comes a huge responsibility (one that many villages are not equipped to take)

When Prabowo launched the 80,081 KMP in Klaten in July 2025, only 108 were operational. More than 99 percent existed only as legal entities on paper. By late 2025, the Cooperatives Minister himself asked the President to push back the March 2026 deadline to establish all units. Meanwhile, Agrinas had already received Rp 600 billion in construction advances and paid Rp 7.39 trillion as a down payment on the Indian vehicle imports.

The scope, too, keeps expanding. What began as village grocery stores and savings units now includes clinics, pharmacies, cold storage, logistics hubs, solar panel farms of up to 1.5 hectares per village, and over 100,000 imported vehicles.

Side note: We wrote about the administration’s 100 GW solar capacity ambition, 80 GW of which would be supported by village-level plants administered by KMP in this piece.

A cooperative meant to do everything risks becoming nothing clear. And through it all, Agrinas operates with no publicly disclosed cost breakdowns, no competitive procurement, and a CEO who tells parliament that Rp 1.6 billion per outlet is “very rational” without releasing the budget to prove it.

Let’s rethink this before it’s too late

We have been here before. New Order-era Village Cooperatives (‘Koperasi Unit Desa’) consumed vast resources, bred patronage, and collapsed when state support was withdrawn after 1998. Reform-era village-owned enterprises (‘BUMDes’) got a mixed record at best. Each attempt to engineer village prosperity from the top down has produced the same arc: impressive numbers at launch, institutional decay over time, and communities left to bear the costs.

The difference this time is the price tag: Rp 240 trillion. Six years of village fund commitments. 80,000 entities run by untrained personnel. 105,000 imported trucks parked at military posts.

We urge the government to halt the current rollout and conduct an honest assessment of what has actually been built; what is operational, and what is not.

Pause the vehicle imports until cooperatives are ready to receive them. Open Agrinas’ procurement records and cost breakdowns to public scrutiny, as the law requires. Most importantly, redesign the program around the villages themselves. Let communities decide whether a cooperative is what they need; if so, what form it should take, and what business is appropriate for their local economy. Last but not least, return the village funds to village control.

A cooperative imposed from above is nothing but a government-run shop with a different name, not a cooperative in its original sense, where a bottom-up establishment is imperative. Indonesia’s villages deserve better than this.

What do you think about KMP? Have you spotted one in your area? Share your thoughts in the comment box!

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In what seems to be an annual occurrence at this point, the Indonesia Endowment Fund for Education (LPDP) is once again under public scrutiny after a former awardee bragged online about her child getting foreign citizenship. The video, which went viral on social media, sparked uproar, leading to what many have described as a “witch hunt” for LPDP awardees who failed to fulfill their obligation to return to Indonesia upon graduation.

We are not going to chime in on this particular case. Instead, we want to pose a fundamental question: What does LPDP actually want to achieve? If this remains unanswered, public outcry about LPDP will keep recurring. We understand the frustration with awardees: whether they return, whether they “contribute”, and whether they are worth the trillions of public funds spent year after year. But we think that the frustration is currently aimed at the wrong party.

In 2024, we already wrote about LPDP’s lack of a clear Theory of Change (ToC). Today, we want to reiterate this need. Hopefully, a change is coming so we won’t have to make a case for reform again next year and onwards.

Two distinct and legitimate goals

LPDP today is a general-purpose, return-mandatory scholarship with no required employment anchor and no deliberate diaspora strategy. Awardees are admitted on broad criteria, funded generously, and handed a legal obligation to return to a labor market that was not consulted on what it needs and is not prepared to absorb what it gets.

But we think there are ways to fix this. We propose 2 options for LPDP administrators to consider in defining their objectives and reforming their scholarship programs.

Option A: Nation-building

Under this model, LPDP would serve as a tool for nation-building. The state identifies a gap—e.g., in a hospital, a ministry, a university, a sector, and funds the right talent that could potentially fill that gap. As such, the scholarship will be tied to a role that already exists or is being planned for the recipient(s). Before departure, both parties know the plan and sign a concrete agreement: who the employer is, what the position is, and when the scholar returns to take it up.

This is roughly how Singapore’s Public Service Commission (PSC) scholarship model works. Bond scholars are placed into a specific ministry or statutory board upon return—for four to six years—depending on needs. The terms are clear, and the obligation to return comes with a specific guarantee. The returnee is designated to fill a specific role, within a specific institution, for a specific duration—structured enough that both parties understand the deal before the scholarship is awarded.

Under this logic, LPDP should accept only applicants with a confirmed institutional sponsor: a government agency, a hospital, a university, or a private sector institution with clear value-add to the nation. No sponsor, no scholarship. This way, the LPDP will not merely tell its awardees to “just return home” and “figure it out” themselves, which continues to put its awardees between the impossible choices of returning with no prospect and taking opportunities while violating their obligation to return.

Option B: Global standing

Under this model, the LPDP would wager a long-term bet on national prestige. The goal will be to produce a generation of internationally educated Indonesians with credentials from the world’s best institutions, build elite networks, and accumulate the kind of expertise and credibility that can eventually open doors for the country to increase its presence on the global stage.

With this goal in mind, the mandatory return clause naturally becomes irrelevant. If there is no job waiting for them at home or at least a sector or system within which they can try to build things from the ground up, LPDP is basically wasting its own investments.

In its current logic, LPDP is basically sending a message to its awardees that it’s better for them to come back home with, say, a degree in theoretical physics and start another nasi goreng franchise rather than work in another country with leading theoretical physics research institutions, systems, financing, and facilities. All simply because LPDP administrators can’t—and won’t—define what they mean by “contribution,” whereas Indonesia is simply not ready to absorb the different kinds of talents and expertise that come from a sudden influx of graduates with international degrees.

The better bet—one that countries like China and India have implicitly made—is to let them stay abroad and trust that the value of having a well-educated diaspora compounds over time. India did not engineer its way to having its nationals lead Google, Microsoft, and the IMF by demanding they return home after graduation. It happened because a generation of talented Indians was educated at the world’s top institutions, remained connected to their roots, and carried their country’s identity with them as they rose.

A scholarship designed for this purpose would look more like a soft loan or a long-term grant—flexible enough to let recipients build genuine global standing, with structured mechanisms to keep them tied to Indonesia over time, rather than a legal obligation that forces a lazy choice between excelling abroad and getting stuck at home. Surely, it doesn’t have to be an either-or situation, but as things stand now, LPDP is setting itself up to fail.

Is the current design both or neither?

The consequence of LPDP’s lack of clarity is predictable. Awardees who return find that what they studied does not map onto what jobs are available. Meanwhile, those who stay abroad risk a penalty which many are increasingly treating as a buyout option.

As of early 2026, over 600 awardees are under investigation for suspected contract violations. In the meantime, LPDP continues to send a growing cohort of awardees across the world. Many of these awardees take LPDP scholarships because the opportunity is too good to miss, but they do not have a clear vision of what their degrees would unlock. Instead of a career accelerator, LPDP has become an option for many seeking a career break.

By no means are we suggesting the abovementioned proposals are the only two possible options for how to restructure the scholarship. The point is that the current scheme is far from ideal, and that reform is overdue.

And we are not alone in thinking this. In 2024, then-Finance Minister Sri Mulyani met with McKinsey to discuss LPDP governance reform. That same year, a review by the Supreme Audit Board (BPK) found several problems, among others: (1) discrepancy between the number of scholarships granted and the number of recipients finishing their degrees, (2) inconsistent application of admission standards during selection, and (3) full disbursement of funds to recipients who do not finish their degrees. Most recently, Higher Education Vice Minister Stella Christie said they were conducting a cost-benefit analysis to inspect the “fairness and quality” of LPDP scholarships.

These are all reasonable steps. But still, they risk producing refined answers to the wrong questions in the first place. Thus, we hope to ignite wider conversations on how LPDP could be reformed so it could deliver a better impact. It’s about time we put this tired debate to rest—and that has to start with the government setting a strong theory of change for LPDP and actually enforcing it.

For a lot of Indonesians, the scariest thing you can see isn’t a ghost. It’s an “Inactive” status on the national health care and social security (BPJS) app, JKN Mobile. Especially when that status change happens while you’re queuing at a hospital registration desk with a family member in urgent need of their next round of dialysis or chemo.

Yet this is exactly the situation that unfolded last week when approximately 11 million people lost their BPJS insurance with no prior notice. Apparently, the government had changed the classification of those deemed worthy of the contribution assistance recipient (PBI)—a scheme where the government picks up the tab for the poor. Simply put, the rule change meant that the government decided those 11 million people just aren’t poor enough anymore to receive the subsidies.

To understand the mess, you have to look at the three tiers of BPJS schemes: waged workers (PPU) whose dues are paid through payroll deductions, non-waged workers (PBPU) who pay their dues out of pocket, and PBI. Amid widespread budget cuts, the government has recently set a threshold of 96.8 million people only to be covered under PBI, which explains the ‘sudden’ database purging.

The Social Affairs Ministerial Regulation No. 3/2026 mandates the reclassification to align BPJS database with the National Social and Economic Single Data (DTSEN) from Statistics Indonesia (BPS) and the Social Affairs Ministry, which ranks people based on monthly expenditure per capita. This new 10-decile ranking system effectively turns a statistical welfare score into a rigid “on/off switch” for PBI eligibility.

But we want to be clear here: the DTSEN itself is not the problem. After all, the intention is exactly what we’ve gravely needed for a long while now. A unified registry means that social assistance programs can actually be enjoyed by the most vulnerable among us.

How the DTSEN determines if you’re eligible for assistance

If you’re in Deciles 1 through 5, you’re eligible as PBI recipients. But if somehow you are bumped up to, say, Decile 6, you’re out instantly. That means you’re no longer an eligible PBI recipient and must pay your BPJS dues either as PPU or PBPU.

The logic is fine on paper—subsidies should indeed go only to those who need them—but the sudden implementation is borderline heartless. Even more so when you consider that the government may have bumped you up on the DTSEN for any possible reasons.

Perhaps you recently renovated your house or bought a new vehicle or got a new job. Little is known, though—as the methodology isn’t exactly transparent—if the data collection takes into account, say, that you renovated your house because of a recent flood, or if you bought a new vehicle on credit to make it easier to take care of an elderly member of your family, or if your new job comes with a fixed-term contract only. In other words, we don’t know the extent to which the BPS actually verifies the accuracy of the database.

With lives on the line, why the rush?

The most glaring problem in this case is the rapid, rushed PBI status revocation without giving those affected any chance to contest their reclassification.

When did we decide it was okay to turn off someone’s life support—quite literally so for patients with chronic conditions—without as much as a heads-up? If you’re being moved out of the PBI scheme, you shouldn’t find out about it at the hospital when your scheduled dialysis determines whether or not you get to live the next day.

There needs to be a mandatory notification period of, say, three months, where the status remains something like “Active (Pending Transition)” or something to that effect. This would give people time to either appeal the reclassification or at least figure out how to squeeze a new monthly bill into their budget. That’s not asking for too much.

Yes, the Health Ministry issued a statement warning hospitals and care providers not to turn down patients just because their BPJS status is “temporarily” inactive. But that warning came with no explicit reassurance that the patients’ bills would be reimbursed. In the aftermath, the government has yet again done what they seem to have mastered: shifting their responsibility elsewhere. This fiasco puts healthcare providers in a tight spot as they now must choose between treating patients and going under because nobody pays their bills.

Don’t get us wrong. As we said earlier, we’re all for “trimming the fat” i.e. ensuring that subsidies go only to those who are in genuine need. And yes—we are not blind to the fact that there are many well-off people out there who game the system.

When essential services such as BPJS are treated with a “just do it” mentality, we risk trading one problem for another much larger in scale and consequence. In the case of the 11 million people who now no longer have access to their BPJS coverage, their lives are quite literally on the line.

Whether the government learns from this and controls the damage remains to be seen. But we’ll be watching.

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You may wonder: why is The Reformist writing about the stock market? Isn’t this a platform to talk about governance reforms?

The short answer is that because the failure is not in the market but in governance. Read through the end to understand why.

It would, of course, be easier to blame Morgan Stanley Capital International (MSCI) for what happened. Early estimates suggest that the MSCI warning had already pushed at least US$80 billion out of the country. Imagine the scale of catastrophe that would ensue if that warning escalates into decisive action.

Following the mass resignation of high-ranking officials within the Financial Services Authority (OJK) and Indonesia Stock Exchange (BEI) last week, many may assume that this was their fault. But we think that assumption is lazy at worst and politically convenient at best.

An 80-billion dollar reality check

Before MSCI issued its warning on 27 January 2026, it had already engaged the market regulators in a series of consultations. We won’t go into the minute details of what happened, but at the core of it are two words: free float—the shares of a publicly traded company that are actually available to public buyers in the secondary market, such as BEI.

Up until recently, Indonesia allowed companies to be traded on the stock market as long as they maintained a 7.5-percent free float rate. In other words, that means 92.5 percent of shares could remain concentrated in the hands of the controlling few: founders, owners, conglomerates, and other affiliated entities. Many have pointed out that this was already a low bar to begin with. In Asia, Singapore and the Philippines set the rate at 10 percent, Thailand at 15 percent, and leading markets such as Japan, Malaysia, and Hong Kong at 25 percent.

But here’s the deal: while the rate was set at 7.5 percent, the available shares to public buyers are often even smaller than that. When the public cannot participate in the secondary market, it reduces liquidity and amplifies volatility.

The result? Vulnerable price formation, coordinated trading, pump and dump—so many different names, but everyone knows it by the colloquial term of saham gorengan (‘fried stock’). And unfortunately for Indonesia, MSCI decided it was time for a reality check—one that comes with a US$80 billion price tag.

This is where the governance failure becomes impossible to ignore. Three words: beneficial ownership transparency—or lack thereof.

Publicly traded, privately controlled

MSCI is one of the largest global index providers. As of June 2025, it boasts a massive US$18.3 trillion in assets under management (AUM). That is roughly Rp 307 quadrillion, or at least 80 thousand times Indonesia’s 2026 state budget. And that tells you all you need to know why we can’t afford the potential downgrade from an emerging to a frontier market.

We’re not going to break down the technical details, but we can conclude that MSCI is not in the business of ‘cosmetics’. They do not fool around with that much money at stake.

MSCI’s analyses suggest that the freely tradable portion of stocks in the Indonesian stock exchange market is structurally constrained. Inaction was not an option because they’ll essentially be putting themselves at risk. And that’s why, in a grossly oversimplified manner, they took a firmer stance this time by issuing a warning–for now.

Indonesia’s low free float problem is exacerbated by a cluster of what is ultimately a regulatory and enforcement discrepancy. Specifically, we want to focus on the problem of opaque ownership. Many of the companies traded on BEI look alright to the unassuming eyes, but further inspection shows that many are prone to inexplicable, frequent, and sharp price swings. To put it simply, Indonesia is increasingly seen as a liability to MSCI.

In 2018, then-President Joko Widodo issued a Presidential Regulation on Beneficial Ownership. However, this was constructed mainly with the intention of combating money laundering and terrorism financing. Any lawyers you seek advice from would tell you that beneficial ownership is a key compliance issue.

Here, we begin to see the pattern: there is a rule in place, but its enforcement remains a big question mark.

Shining light on the shadows

As is the case with many things in Indonesia, compliance with beneficial ownership disclosure is more declaratory than disciplinary. The Ministry of Law’s General Law Administration Directorate General requires companies to disclose their beneficial owners, but there is barely any verification being done. This creates an accountability failure: companies may report their beneficial ownership information, but we can’t be sure if that information is reliable or not.

Think of it this way: a company seeking to operate in Indonesia is owned by an entity (X), but in reality, X is nothing more than an empty vessel or ‘nominee’ who acts on behalf of another entity (Y). In this case, X is the legal owner of the company, but Y is the beneficial owner, i.e., the ultimate entity that benefits from the company’s activities.

In the stock market, this problem persists. Or rather, worsens. Nominee accounts hold a portion of the free float shares on behalf of a separate controlling interest that remains in the shadows. This gives one entity far too much control, which allows them to potentially manipulate the stock price.

For a retail investor, this opacity is risky. For a global index provider managing trillions of dollars in passive capital, it is plain and simple a liability. And if you’ve followed us so far, the root cause of this fiasco boils down to what we talk about here at The Reformist every week: governance.

Having established that the market crash is a signal of governance failure, that brings us to the final question…

How do we reform the stock market?

Most importantly, we have to start with a disclaimer first: we don’t know the answers either. But we do have a few ideas where OJK, BEI, and all the relevant parties can start.

The resignation of OJK and BEI officials offered little to no resolution. If anything, it’s a temporary patch to signal that a change is coming. If that change never arrives, we’re just waiting for the figurative shit to hit the fan. And when it does, it will come with a price tag so exorbitant that the US$80-billion loss last week would feel like pocket change.

Across the many online investor forums we scrolled through while writing this piece, one single advice resonates: stop buying saham gorengan and look at the fundamentals. In governance terms, our advice to the government is principally the same: stop going for cosmetic solutions and thoroughly address the accountability failures.

Transparency, compliance, and accountability are not just abstract concepts that pose no consequences when ignored. We may not think of them as such, but these are the real variables that index providers like MSCI think of when determining who’s worth investing in and who to stay away from.

This could mean so many different things. Parliament may need to fast-track a law to give regulators stronger enforcement power to make companies comply. The Law Ministry may need to review the thousands of company registration deeds they have in their registry and begin verifying the truthfulness of their beneficial ownership disclosure. The Finance Ministry may need to consider redefining its authorities when it comes to the stock market, in favor of giving OJK and BEI more independence. Law enforcement agencies may need to get more serious with their institutional reform agendas if Indonesia were to rout the entities who pull the string from the shadows—often with ‘protection’ from within their own ranks.

Meanwhile, for those who do not trade in the stock market, it would be gravely wrong to dismiss this turmoil as a problem relevant only to the richest of the rich. Like it or not, we are all intertwined in the system one way or another. No buts.

The next time the market crashes and burns, it may not be those gambling in the stock market that bear the biggest brunt.

Your parents may lose their pension funds overnight, the food vendors in your community may be forced to close down, your Rp 10 million savings may not amount to much if the rupiah tanks, and so many different consequences that we will have to share, whether we participate in the game or not.

This is not far-fetched at all: the US$1.15-trillion Jiwasraya megascandal was largely caused by a pump-and-dump saham gorengan scheme that went wrong in every way imaginable, with 13 investment management companies and an OJK official tried for financial crimes. The ripple effect couldn’t have been more severe: over 2.6 million people lost their insurance—mostly of lower-middle income profile—and at least 7,000 unemployed.

This saga is far from over and we’ll be keeping a close eye on it. But if you did start reading thinking why this is a topic for The Reformist, now you know why.

What are your takes on beneficial ownership and its transparency (or the lack thereof) in Indonesia? Discuss below!

For nearly three decades, Bank Indonesia (BI) has served as the bedrock of the country’s macroeconomic stability. Since the traumatic 1997 Asian Financial Crisis, BI has evolved into a hallmark institution, earning its reputation through a disciplined, technocratic approach to monetary policy. Laser-focused on targeting inflation, the central bank has been keeping price increases predictable and exchange rate fluctuations manageable, even in the face of global shocks and periodic rupiah depreciations.

BI’s successes have been credited largely to its guaranteed independence as mandated by law. However, two troubling developments suggest the wall between the central bank and the executive branch is beginning to thin, risking the undoing of thirty years of institutional credibility for short-term political gains:

1. The appointment of the President’s nephew
   The integrity of a central bank rests largely on the expertise and perceived autonomy of its leadership. The recent nomination of President Prabowo’s nephew, Thomas Djiwandono, to the Deputy Governor position is a troubling signal. Although he had emphasized his resignation as treasurer to Prabowo’s Gerindra Party in December, the familial ties to the Palace still raised concerns. More importantly, Thomas himself would be the first to tell you he lacks a reputable background in monetary policy (he had only been in government for about a year as Deputy Finance Minister).

2. The drafting of the Financial Sector Development and Strengthening (P2SK) Bill
   Currently put forward in the DPR, this bill seeks to expand BI’s mandate to include supporting economic growth. While dual mandates work for the U.S. Federal Reserve, Indonesia’s economic context is vastly different. BI’s single mandate of inflation control provides clear guidance on how to conduct prudent monetary policy in Indonesia. If inflation is high but unemployment is also rising, which path should BI choose? This dual mandate provides a legal backdoor for the government to pressure BI into keeping interest rates low to stimulate jobs, even if it triggers a currency crisis or a price spiral.

The fiscal backdrop makes these institutional shifts even more precarious. The administration’s massive projects, like the Rp 1 trillion a day Free Nutritious Meal (‘MBG’) program or the Red and White Village Cooperatives, are putting our national budget under unprecedented strains. There is a growing fear that BI will be called upon to revive the “burden-sharing” mechanisms as seen during the pandemic: purchasing government bonds to finance budget deficits. If this is done by printing new money, inflation risks will start to be concerning.

We must not take our current stability for granted. We do not want to replicate these cautionary tales:

• Argentina: The government treated the Argentine central bank as an ATM for decades to fund populist spending and bridge fiscal deficits. It resulted in a devastating spiral, with inflation soaring to 211.4 percent in 2023. This directly led to the fall of the government in the 2023 election, which saw Libertarian Javier Milei take power.

• Turkey: President Recep Tayyip Erdoğan infamously pressured the central bank to cut interest rates even as inflation was skyrocketing. This political interference saw inflation hit a staggering 85.5 percent in late 2022 and decimated the Lira, which collapsed from around 18 to the dollar in 2023 to over 32 by early 2024.

• Zimbabwe: One cannot mention hyperinflation without mentioning Zimbabwe, which has trillion-dollar banknotes. This is largely attributed to its historically nonindependent monetary policy.

Inflation is a “hidden tax” that will hit the poorest Indonesians the hardest. To trade BI’s independence and risk instability for political convenience is a gamble we can’t afford to take.

We call on the government and the DPR to stay off of Bank Indonesia and let them operate their inflation-targeting mandate in peace.

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Two decades ago, Indonesia made a silent revolutionary pact with its citizens: The people were given the right to choose their own regional leaders, after decades of letting local legislators choose one for them inside a smoked-filled room. Direct election, a recognition that true legitimacy in a republic flows from the consent of the governed. A governor, or a mayor, anywhere in the country is accountable to the people they serve, not the party elites who appointed them.

However, a debate on whether to move back to an indirect election system has recently gained new momentum. Civil societies voiced their concerns, but we may breathe a temporary sigh of relief following the statement by Sufmi Dasco Ahmad, Deputy Speaker of the House of Representatives, who clarified that the House of Representatives won’t be discussing the regional elections in the coming broader revisions on election law. Still, this is no time for complacency.

History shows that these “test the water” tactics often precede a quieter, determined push for change. Just because the door is closed for 2026 does not mean it won’t be pried open next year; or in the lead-up to the next round of elections. We must remain wary of any attempt to trade public accountability for elite convenience.

Are we really debating if the post-1998 constitutional amendments were a mistake because it’s too costly?

The primary argument for this reversal is that direct elections are too expensive. Proponents point to the massive state budget required to organize votes and the “ballooning” costs for candidates, which allegedly fuels corruption.

But if we follow this logic to its natural conclusion, we find ourselves on a dangerous slippery slope. If the financial burden of democracy is too high for a regent, mayor, or governor, why isn’t it too high for the President? If we cannot “afford” to consult the people on their local leadership, do we also intend to dismantle direct Presidential elections?

To argue that direct local elections are a failure because they are expensive is to argue that the post-1998 constitutional amendments were a mistake. Democracy is indeed a “costly” public good, much like healthcare or education, but the price of a disenfranchised citizenry is far higher still.

Our argument is not that direct elections are without flaw, but that replacing them with selection by the elite few is a cure worse than the disease.

We believe that local elections should remain direct at the hands of the people, for two reasons:

1. Indirect elections remove any sense of transparency and accountability for local leaders.

Under a direct system, the line of sight is clear: the voter chooses the leader, and the leader is responsible to the voter.

If we move to an indirect system, that line is severed. When a leader is chosen by the DPRD, the public loses their “primary” power to punish failure. If the local parliament elects a candidate who is incompetent or corrupt, how do the people hold the legislators accountable?

In our current system, there is no effective mechanism for a citizen to “fire” a legislator specifically for their choice of a regional head. They may decide not to vote for the same party again in 5 years, but by then they might have forgotten completely. We are a notoriously forgiving society.

This creates a layer of political insulation where the wrong candidate can be installed behind closed doors, and the legislators responsible remain shielded from the consequences of that choice.

2. The desire to be re-elected provides the necessary push towards meaningful reform

We need only look at the history of Jakarta to see the virtues of the direct mandate. Across the political spectrum, we have seen successive Governors, who despite their vastly different ideologies, were driven by a common pressure: the need to deliver visible improvements to secure re-election.

From improving the public transport system to social safety nets to building public spaces for kids, these advancements happened because the leaders knew their survival depended on whether they delivered for their constituents. And Jakarta is hardly alone in this.

Bojonegoro recorded the highest rate in stunting reduction nationally in 2025 while preventing new cases. Surabaya topped the 2025 UI Green City Metrics having improved its waste management service while expanding green public spaces. Banyumas prevents 77% of its city waste from going to landfill and is recognized by neighboring ASEAN countries as a good example of how to manage waste sustainably.

The direct mandate forces a competition of ideas and results. In an indirect system, that competition is replaced by a competition of “lobbying” and “political dowries” (mahar), where the winner is the one who satisfies the party caucus, not the one who fixes the city’s problems. The few cases above illustrate how direct electoral pressure can align political survival with outcomes that benefit the public—even if imperfectly—versus an alternate reality where the benefit is squandered by the elite.

The current system needs improvements, but we don’t need to burn it down entirely just yet

We don’t deny that our current system is not ideal. The high cost of entry often bars the most competent candidates from running, and money politics remains a stubborn stain on our democracy. However, the solution is to refine the mechanics, not remove the voter.

Instead of dismantling the system, we should focus on:

• Streamlining the electoral calendar to reduce the “fat” in administrative spending.

• Capping spending and strictly enforcing transparency to lower the cost of candidacy.

• Democratizing political parties by addressing the “mahar” system at its source by regulating how parties select their nominees internally.

The Association for Elections and Democracy (Perludem) wrote a comprehensive report on how this can be achieved, read here.

Democracy is expensive, but it’s still our best bet

Democracy, by way of direct voting, is often inconvenient and rarely “cheap” especially for Indonesia with its vast geographical spread. But direct voting is the ultimate check on power. Reverting to indirect elections is a vote of no confidence in the Indonesian electorate. It sends the message that we, the people, are incapable of choosing our own path—even if we will not always get it right.

The real question is not whether democracy is too expensive, but whether the costly price tag ensures or buys accountability.

We stand for a system that trusts the people’s judgment. Let us focus on making our elections cleaner and more efficient, but let us never make the mistake of making them a mere elite ordeal.