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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

October 16, 2026

The inauguration of Suyudi Ario Seto as the new National Police (Polri) chief should be a chance to ask whether Polri can become a truly professional force. The early signals suggest it will not.

The new chief reshuffled senior appointments a day after his inauguration, but a reshuffle shows who holds power, not what the institution will do with it. Gen. Suyudi also said he would continue the policies of Gen. Listyo Sigit Prabowo whom he replaced, which is a clear statement that the institution's direction will stay the same. That pledge matters because the old direction is the problem.

Under Listyo, Polri was repeatedly criticized for heavy-handed policing of protests, impunity for abusive officers, and perceived political alignment. Reform was always promised as a project. In September 2025, Listyo formed an internal Police Reform Transformation Team on the president's direction, made up of 52 high- and mid-ranking officers. A body of serving officers reforming their own institution is an exercise in self-assessment, and self-assessment rarely produces structural change. A chief who promises continuity inherits that approach and will probably keep it.

The new Police Law enacted early this year reinforces the doubt. A reform law should have done at least three things: strengthened independent external oversight, narrowed Polri's sprawling mandate and tightened civilian control over appointments and budgets. A law that leaves these untouched may carry the label of reform but does not deliver it. The gap between the reform spirit of the public and the text of the statute shows how much influence Polri has over its own regulation.

The change of guard is better read as a transfer of loyalty than a change of course. Listyo rose under then President Joko “Jokowi” Widodo, and was seen as loyal to him. The new appointments mostly shift that allegiance to the sitting president, Prabowo Subianto . This is a real change in the chain of loyalty, but it does not make Polri more accountable to the public. It only changes which patron the force answers to. In a system where the police chief serves at the president's pleasure and the legislature approves nominees almost automatically, professionalism depends on the goodwill of whoever occupies the palace.

The most telling indicator is the growing number of active and retired police officers in Prabowo's administration. The same pattern applies to the military. Officers placed in ministries, agencies and state-owned enterprises extend the institution's reach into civilian governance. Some of this practice is being challenged. The presidential palace has said it will comply with a Constitutional Court ruling that requires police members to resign or retire before taking positions in civilian institutions.

That ruling is welcome, but compliance will be revealing. Officers can retire and keep their networks and loyalties, and a rule about formal status does not address the habit of treating the bureaucracy as a career extension for the security services. This points to the structural problem. Polri, like the TNI, has become one of the most powerful special interest groups in Indonesian democracy, arguably stronger than political parties, business associations or Islamic organizations.

Parties are fragmented and dependent on patronage. Business lobbies are constrained by competition among firms. Religious organizations have large followings but lack coercive power. The security forces have an institutional budget, a national command structure down to the village level and the capacity to affect elections, protests, investigations and the personal fortunes of politicians. They lobby and pressure the government to protect their own interests first: budgets, promotions, legal immunities and post-retirement positions.

For a president, this creates a bargain that is hard to refuse. A leader who needs the police and military to stay stable, manage dissent or secure an election cannot easily confront them. The price of their support is favors: protecting their prerogatives, appointing their members and avoiding laws that would constrain them. Each president can claim to support reform and still decline to impose it, because a determined confrontation would cost more than the reform is worth politically. Reformers inside the institution understand this and wait for it to pass.

None of this means reform is impossible. It means reform will not come from the top alone, and it will not come from the police themselves. The pressure has to be external and sustained: a stronger independent oversight body with real investigative and sanction powers, civilian control over budgets and promotions, consistent enforcement of the Constitutional Court's rule on civilian posts and a legislature willing to scrutinize appointments rather than approve them. Civil society, the press and the courts have to keep the issue alive after the headlines fade.

Until then, the best prediction is continuity with a change of faces and a change of patron. A professional police force is one whose loyalty is to the law and the public. By that standard, the new chief's first days suggest the force is not moving toward that goal.

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