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.

Rather than safeguarding justice, Indonesia's legal instruments are increasingly being bent to serve institutional interests. The standoff between the Constitutional Court (MK) and the National Police over the assignment of active officers to civilian posts exposes not merely regulatory inconsistency, but a deeper disregard for constitutional authority.

Indonesia's current account balance returned to a surplus in the third quarter (Q3) of 2025, but the improvement was overshadowed by one of the sharpest capital outflows in recent years. Bank Indonesia (BI) reported that the current account swung into a surplus of US$4 billion, or 1.1 percent of GDP, the first surplus in 10 months. However, this gain was more than offset by a steep financial account deficit of US$8.1 billion. As a result, Indonesia posted an overall balance of payments deficit of US$6.4 billion in Q3.

The administration of Prabowo Subianto is reforming the disbursement of fuel and electricity subsidies to improve state budget efficiency. These subsidies have long been criticized for disproportionately benefiting upper-middle-class households, who consume more energy, rather than the poor and vulnerable groups they are intended to support. As a result, the government now aims to better target subsidy distribution and reduce its long-standing fiscal burden. The urgency to optimize subsidy spending has also grown amid rising expenditures for several major government programs.