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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.
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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.
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The country’s long-running food estate ambition is entering a new and larger phase with the conversion of vast forest areas in South Papua into non-forest zones, or areas for other uses (APL). Initially framed as a strategy to achieve rice self-sufficiency, the program has now expanded under President Prabowo Subianto to also pursue energy security, with palm oil positioned as a key commodity to serve both goals.
The food estate initiative was launched in 2020 under President Joko “Jokowi” Widodo, following warnings from the Food and Agriculture Organization that the COVID-19 pandemic could trigger global food shortages. Framed as a matter of national defense, the program was assigned to then-defense minister Prabowo.
At the time, the Defense Ministry proposed Merauke Regency as the project site, citing abundant available land. The Merauke administration said it had at least 2.5 million hectares suitable for development, half of which had previously been allocated to the Merauke Integrated Food and Energy Estate (MIFEE) project under the administration of Susilo Bambang Yudhoyono. The project ultimately failed, largely because wetlands in the area proved unsuitable for rice cultivation.
Political considerations played a role in Jokowi’s decision not to revive the MIFEE, as a successful revival could have bolstered Yudhoyono’s legacy at a time when his Democratic Party sat in opposition. Jokowi opted instead to develop food estates in Central Kalimantan but that effort also faltered, in part because peatland is similarly ill-suited for farming rice.
Yet Merauke never fully disappeared from the policy agenda. On Apr. 19, 2024, after Prabowo had been declared president-elect, Jokowi issued Presidential Decree No. 15/2024 on establishing a sugar and bioethanol self-sufficiency task force. He then appointed his investment minister Bahlil Lahadalia to lead the task force, which was assigned to implement its program in Merauke, the original location proposed by the Defense Ministry.
Prabowo immediately followed suit, moving to redirect the food estate program back to Merauke. To get an early start, he brought in Jhonlin Group owner Andi “Isam” Syamsuddin, facilitated by Isam’s cousin Amran Sulaiman, who was agriculture minister at the time. Jhonlin began clearing land and building infrastructure for rice paddies, deploying 2,000 excavators imported from China worth Rp 4 trillion (US$236.94 million). When Prabowo took office in October 2024, Amran was retained as agriculture minister.
The sugar and bioethanol self-sufficiency project soon ran into institutional hurdles. A budget deadlock and the absence of a regional spatial plan (RTRW) for South Papua, newly established in 2022, prompted the formation of a high-level coordination team led by Coordinating Food Minister Zulkifli Hasan via Presidential Decree No. 19/2025, issued on Aug. 5. The team designated the food estate as a national strategic project (PSN) and declared Merauke, Mappi, Asmat and Boven Digoel as national food, energy and water self-sufficiency areas under Coordinating Economy Minister Regulation No. 16/2025.
To support the food estate PSN, 489,940 ha of forests in Merauke, Boven Digoel and Mappi were reassigned non-forest area (APL) status on Sept. 18 through Forestry Minister Regulation No. 591/2025. Oil palm development plans include 143,000 ha of these newly converted forests and 326,000 ha of illegal plantations seized by the forest area enforcement task force (Satgas PKH).
The National Procurement Agency (LKPP) issued Regulation No. 3/2025 on Sept. 22, to accelerate state funds disbursement by eliminating electronic bidding and feasibility study requirements for vendors of self-sufficiency areas.
This regulatory change enabled Jhonlin to bill the 2025 state budget for work done in 2024 to a tune of Rp 7 trillion, Rp 1 trillion of which has been paid.
Further cementing the program’s footprint, the Agrarian and Spatial Planning Ministry issued decrees on Jan. 11, 2026, granting right to build (HGB) and right to cultivate (HGU) for 328,000 ha of land redesignated as APL. This includes customary forests for which indigenous Papuan communities have long sought formal recognition.
