Indonesia entered 2026 with an unusual fiscal blind spot. In the first week of the new year, the State Budget (APBN) 2026 Law had yet to be made publicly available, only appearing on the same day the Finance Ministry released its report on the 2025 APBN performance. More strikingly, Presidential Regulation (Perpres) No. 118/2025, which details the APBN and operationalizes the budget, has yet to surface at all.

The protracted disaster response in parts of Sumatra has increasingly become a focal point of public criticism, testing not only the state's operational capacity but also its willingness to engage with dissent. Rather than treating criticism as an essential component of democratic accountability, the government has often responded defensively, a posture that risks deepening public distrust at a time when confidence in state institutions is critical.

Indonesia may face a tax revenue shortfall this year, as recent data show the country had realized only 74.62 percent of its annual tax target as of November, underscoring mounting difficulties in sustaining revenue growth amid global and domestic economic headwinds. The World Bank Group (WBG) has projected Indonesia's tax ratio, the share of tax revenue in gross domestic product (GDP), to fall to 9.4 percent in 2025, down from 10.1 percent in 2024. The downward trend is a worrying signal for future state spending, particularly as the government rolls out costly flagship programs that risk widening the fiscal deficit.

The direct election mechanism as a way of choosing political leaders could become a thing of the past in Indonesia, starting with the election of the heads of regional administrations, but it could go all the way up to the election of the head of state.

Indonesia's ambition to strengthen its domestic steel industry is being quietly undermined from within. While policymakers continue to champion downstream industry development, industrial resilience and import substitution, recent findings by the Supreme Audit Agency (BPK) reveal troubling weaknesses in steel import governance. The problem extends beyond illegal imports, pointing instead to regulatory gaps, weak inter-ministerial coordination and administrative failures that continue to erode the credibility of Indonesia's industrial policy.

In a surprising turn of events to cap off the year, Nahdlatul Ulama (NU), Indonesia's largest Muslim organization, has been shaken by turmoil that many observers are calling an internal coup. At the center of the storm is the sudden political ousting of Yahya Cholil Staquf as chairman of NU’s executive body Tanfidziyah.

The national policy on export proceeds (DHE) from natural resources has been revised for a third time after repeated attempts failed to significantly bolster foreign exchange (forex) reserves or deepen onshore foreign currency liquidity. The latest revision relaxes the mandatory rupiah conversion requirement from 100 percent to 50 percent and requires the placement of DHE in Association of State-Owned Banks (Himbara) members. While this is intended to ease pressure on exporters, it raises questions about whether locking DHE onshore can be effective in the long run without undermining export competitiveness.