Sector

Finance

Indonesia’s financial sector has been flourishing over the past half decade. The COVID-19 pandemic period, while being a time of austerity for most sectors, led to revolutionary innovations in Indonesia’s financial services industry, particularly in fintech. From December 2020 to December 2022, total assets of the fintech sector grew by 48.54 percent from 2020 to 2022. This growing trend continued even after the pandemic lockdowns ended, as total assets in fintech grew by 30.8 percent from December 2022 to December 2023.

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Finance

Indonesia’s financial sector has been flourishing over the past half decade. The COVID-19 pandemic period, while being a time of austerity for most sectors, led to revolutionary innovations in Indonesia’s financial services industry, particularly in fintech. From December 2020 to December 2022, total assets of the fintech sector grew by 48.54 percent from 2020 to 2022. This growing trend continued even after the pandemic lockdowns ended, as total assets in fintech grew by 30.8 percent from December 2022 to December 2023.

With fintech paving the way forward, traditional banking followed suit by revolutionizing its services. From 2022 to 2023, the banking industry’s fund distribution increased by 6.28 percent, source of funds increased by 6.33 percent, and total assets in the industry grew by 6.98 percent, reaching a total of US$8.22 trillion. Moreover, even regional banks have been benefitting from this wave of innovation. For the same period from 2022 to 2023, the regional banking sector saw a 7.67 percent in distributed funds, an 8.08 percent increase in source of funds, and a 7.52 percent increase in total assets, reaching a total of US$137.96 billion.

Innovations in Indonesia’s finance sector extend beyond financial services. On September 2023, the Indonesian monetary authority, Bank Indonesia (BI), introduced three pro-market monetary instruments that function as short-term fixed income securities with high coupon rates. The three instruments, SRBI, SUVBI, and SUVBI, were able to collect Rp 409 trillion (US$25.2 billion), US$2.31 billion, and US$387 million, respectively.

Particularly in the case of the SRBI, this instrument represented an innovative way to attract capital flow from abroad during a period of high credit costs and slow investment. Approximately 20.77 percent, or Rp 85.02 trillion (US$ 5.26 billion), of the total outstanding SRBI were owned by non-Indonesian residents, underscoring the SRBI’s success as a monetary instrument.

Even when compared to other countries in the same region, the Indonesian finance sector stands out for its stability against fluctuations. Throughout 2023, the global cost of credit was high due to hawkish Fed policies made to curb US inflation, resulting in a stagnation of capital flow on a global scale. Entering the second quarter of 2024, the composite index of many Southeast Asian countries such as Singapore and Thailand recorded price decreases compared to the same period last year, reaching -3.96 percent and -13.9 percent on the Straits Times Index (STI) and the Bangkok SET index, respectively. Meanwhile, the Jakarta Stock Exchange Composite Index (JKSE) recorded a price increase of 5.18 percent for the same one-year period.

In summary, the Indonesian financial sector stands out for its stability and consistency, maintaining growth through innovation even during periods of austerity or global uncertainty. This consistency is also reflected in its GDP, which grew by 7.4 percent from 2022 to 2023, contributing roughly 4.16 percent to the national GDP in 2023.

Latest News

July 31, 2025

Former president Joko "Jokowi" Widodo and the Indonesian Solidarity Party (PSI) have formed an alliance that aims to advance their respective interests in elite politics. While the PSI seeks to secure seats at the House of Representatives in the next general election, Jokowi appears to be carving out a political role so he can continue to wield influence after his presidency, particularly after he was dumped by his former party, the Indonesian Democratic Party of Struggle (PDI-P).

Originally scheduled for May, the 2025 PSI national congress took place on July 19-20 in Surakarta, Central Java, Jokowi’s hometown and the city that helped catapult him to the country’s highest office. For the venue, the party chose Graha Saba Buana, which is adjacent to Jokowi’s private residence, signifyign the deep political ties between the PSI and the Widodo family.

During the congress, Jokowi’s youngest son Kaesang Pangarep was reelected as PSI chairman for the 2025-2030 term with 65.28 percent of the vote. While the party said its election involved a transparent mechanism based on the principle of one person, one vote, PDI-P politician and former PSI member Guntur Romli claimed that Kaesang's victory was predetermined a month prior.

The congress also saw the PSI unveil a new logo: a redheaded elephant, which it says represents strength, composure and dignity in Javanese philosophy.

Jokowi attended the congress, publicly endorsing the PSI and reportedly planning to chair its board of advisors. He expressed optimism that the PSI would become a dominant political force by 2034, despite its struggle to gain a foothold in past elections: it garnered 1.89 percent in 2019 and 2.8 percent in 2024, both below the 4 percent legislative threshold.

Kaesang's entry into the PSI just before the 2024 election failed to secure any House seats, prompting the party's further efforts to leverage Jokowi's high public approval rating of 75 percent.

However, Jokowi's statement that the PSI should not be controlled by members of the political elite or certainly families, which seems to have been aimed at parties like the PDI-P, drew criticism for its hypocrisy, given that his son holds the PSI chairmanship. Amien Rais, a former speaker of the People’s Consultative Assembly, warned this could erode public trust, while PDI-P lawmaker Aria Bima pointed out that Jokowi joining the PSI advisory board would contradict the party's vision of openness.

While the attendance of President Prabowo Subianto at the PSI congress signaled a cordial relationship, some of his early policy decisions, such as not holding this year's Independence Day celebrations in Nusantara, indicate a potential divergence from his predecessor’s agenda. Prabowo has also not taken action against a call to impeach Vice President Gibran Rakabuming Raka, Jokowi’s eldest son.

Gibran, who has been unaffiliated with any political party since his dismissal from the PDI-P last year, was also among the key attendants at the congress.

For Jokowi, strengthening ties with the PSI appears to be a deliberate strategy to retain political relevance after his second and final presidential term ended last October. Following his successful effort to secure the vice presidency for Gibran alongside Prabowo, Jokowi's backing Kaesang in the PSI leadership indicates the further entrenchment of dynastic politics in Indonesia’s political party landscape, particularly with an eye on future elections.

The PSI-Widodo family alliance represents a strategic mutualistic symbiosis in national politics. The PSI gains prominency vis-à-vis Jokowi, whose high public approval and political capital can boost its electoral prospects as well as legitimacy. In return, Jokowi secures a platform to maintain post presidential influence, circumventing his former party's attempts to sideline him.

This dynamic highlights the increasing role of political families and individual influence in shaping Indonesia's political future, as both sides seek to maximize their power and navigate the evolving political landscape.

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