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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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Despite the rise in graft scandals over the past year, a recent sting operation by the Corruption Eradication Committee (KPK) in Riau signals that systemic corruption in the country is showing no sign of slowing down.
On Nov. 3, KPK investigators arrested Riau Governor Abdul Wahid along with his confidant Tata Maulana at a cafe in provincial capital Pekanbaru. The graft probe was initiated in May 2025 after the antigraft body received a tip from local residents alleging potential foul play between Abdul and the province's Public Works and Spatial Planning Agency.
Investigators uncovered an illicit kickback scheme in which the governor, who hails from the National Awakening Party (PKB), demanded 5 percent of the agency's Rp 177 billion (US$11 million) budget allocation, or around Rp 7 billion, threatening the removal or transfer of officials who refused to meet his demand.
Coming after only nine months in office, the probe found that at least Rp 4.05 billion of the Rp 7 billion demanded had been given to Abdul via close aides and confidants, and were reportedly used for lavish trips to countries like the United Kingdom and Brazil.
The KPK also arrested several others, including agency head Muhammad Arief Setiawan and the governor's expert staffer Dani M. Nursalam.
The Riau governor's case represents a familiar rather than an anomalous pattern, and one that feels old-fashioned. While the scandal centers on infrastructure kickbacks, the country's corruption trend has shifted, according to Indonesia Corruption Watch (ICW). The watchdog noted a major change in 2024 when, for the first time, the biggest financial losses no longer came from infrastructure and procurement projects, but from fictitious reporting related to mining permits.
While infrastructure-related cases like Abdul's accounted for 35 percent of all 364 corruption cases recorded last year, non-infrastructure cases dominated with 65 percent. The Riau case fits the general nationwide pattern, however, with the KPK stating that over 51 percent of all graft cases occurred at the regional level, at both local administrations and legislatures. While most graft schemes today involve document fraud related to licensing and reporting, the Riau case presents a throwback to under-the-table thuggery by those in power.
A similar case emerged few days later in Ponorogo, East Java, where the KPK uncovered a corruption network centered on regent Sugiri Sancoko, from the Indonesian Democratic Party of Struggle (PDI-P). Investigators found that a private contractor had paid a 10 percent project fee of around Rp 1.4 billion to Yunus Mahatma, director of the Harjono Ponorogo Regional General Hospital, who then handed a portion of the money to Sugiri via an aide and his brother.
Abdul is the fourth governor of the oil-rich province to be arrested for corruption in the last two decades. Saleh Djasit (1998-2003), Rusli Zainal (2008-2013) and Annas Maamun (2014) were nabbed for a range of graft scandals, from illegal procurements to bribery, with Annas arrested the same year he assumed office, just like Abdul. When it comes to Riau governors, power and greed appear to go hand in hand.
Meanwhile, the incumbent governor has yet to receive a final decision on his party membership from PKB chairman and coordinating social empowerment minister Muhaimin Iskandar, who has warned other members against emulating Abdul.
The contrast between graft styles is stark. Abdul's alleged corruption presents a clearly defined method, unlike the high-profile, politically charged corruption trial early this year of Thomas Lembong, a former trade minister in 2015-2016. Before he was pardoned by President Prabowo Subianto, Thomas was convicted on charges related to incurring Rp 578 billion in state losses for a sugar import scheme he implemented during his tenure as minister.
However, activists and experts noted during his trial that Thomas's actions lacked any mens rea (criminal intent). In comparison, Abdul's actions appeared to have been explicit, according to officials in the Riau public works agency, who described the scheme as nothing more than "a cut for the local thug".
While President Prabowo has pledged to root out endemic corruption, it seems his antigraft efforts have yet to resonate at the regional level.
