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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.

Latest News

January 15, 2026

After decades of relying on Dutch colonial regulations, Indonesia finally has its own Criminal Code (KUHP), which came into effect on Jan. 2. While the government claims the new KUHP reflects modern legal standards, critics say it retains significant gaps, particularly regarding potential conflict between law enforcement practices and human rights protections.

One article that has drawn intense scrutiny concerns insulting the president and vice president as well as the government and state agencies. Critics fear this provision could shield officials from legitimate criticism, resembling past offenses frequently used to silence opposition against the colonial regime. There is a palpable concern this could create a climate of fear among activists and journalists.

However, the drafters of the new KUHP, primarily the Law Ministry and House of Representatives Commission III, which oversees law enforcement, argue that Article 218 is a substantial improvement over Article 134 in the previous code. The latest KUHP reclassifies this as "delik aduan" (complaint-based offense) rather than an ordinary offense, meaning that legal proceedings can only be initiated upon a formal complaint from the affected party. The maximum penalty has also been reduced from six to three years.

Deputy Law Minister Edward "Eddy" O.S. Hiariej has emphasized that only specific officials could file complaints, such as the president, the vice president and the heads of major state institutions. He also clarified that the offense applied to insults directed at institutions, not individual officeholders.

Further, Article 218(2) explicitly states that criticisms, protests and views intended to evaluate government policies are legitimate forms of expression and may not be criminalized. In a similar vein, the new KUHP treats violations related to public demonstrations as "material offenses", meaning they are punishable only if they result in tangible harm, such as public disorder, rioting or property damage.

The new code also introduces major changes to capital punishment. The death penalty is no longer categorized as a primary punishment but as a sanction of last resort. Article 100 stipulates a 10-year probationary period for death sentences and if a convict demonstrates exemplary conduct during this time, their sentence may be commuted to life imprisonment or a maximum 20 years in prison.

Lawmakers acknowledge that the new KUHP does not formally abolish the death penalty, but say this mechanism moves the judicial system away from the death penalty as a form of criminal punishment.

On offenses related to the state ideology, the KUHP maintains that spreading communism or Marxism-Leninism is incompatible with Pancasila. However, Article 188(6) exempts academic activities such as teaching and research, provided they are not intended to promote these political doctrines and socioeconomic systems. Nevertheless, concerns remain that law enforcement could misinterpret the thin line between "teaching" and "disseminating" ideas.

House Commission III chair Habiburokhman, who hails from the ruling Gerindra Party, has defended the new KUHP. In particular, he has pointed out that concerns about the criminalization of journalists and academics are addressed by a requirement for proof of criminal intent (mens rea). He argues the new code has shifted focus from the content of the information spread to the consequences it generates, reinforcing the principle that criminal law should serve as ultimum remedium (last remedy) and not a primary tool of repression.

Legal scholar Romli Atmasasmita says the true test of the KUHP will be its implementation. The challenge lays in balancing legal certainty with social justice, ensuring that authorities translate the spirit of the new code into practice without neglecting the rights of vulnerable groups, including indigenous communities who have long been marginalized.

Amid the ongoing democratic decline, however, the new KUHP looks set to exacerbate the setback to Indonesian democracy.

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