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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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Some 25 deputy ministers in President Prabowo Subianto Prabowo Subianto Djojohadikusumo, 72, is a retired Army lieutenant general, a businessman and the incumbent Defense Minister (2019-present). Due to his proximity to power throughout his military career, he entered politics in 2004 to pursue his dream of becoming the nation’s president. 's bloated cabinet currently hold concurrent positions as commissioners in various state-owned enterprises (SOEs), which appear to be rewards for helping him win the presidential race last year. This practice raises serious concerns about conflicts of interest and the abuse of power, potentially harming the state for the benefit of a select few individuals or groups, in addition to possible legal violations.
Among those serving dual roles are Deputy Villages, Disadvantaged Regions and Transmigration Minister Ahmad Riza Patria, who is also a commissioner for state telco company Telkomsel; Deputy Environment and Forestry Minister Diaz Faisal Malik Hendropriyono, who serves as president commissioner of Telkomsel; and Deputy Immigration and Corrections Minister Silmy Karim, who is a commissioner at Telkom Indonesia. The situation is further complicated by some of these deputy ministers being active members of political parties within the governing coalition, such as Ahmad Riza of the Gerindra Party and Diaz of the tiny Justice and Unity Party (PKP).
This practice has sparked public controversy as it appears to contradict Constitutional Court Decision No. 80/2019, which prohibits state officials from simultaneously holding positions in state-owned or private enterprises. However, Presidential Communications Office chief Hasan Nasbi has defended the government’s policy, asserting that the court's ruling does not explicitly prohibit deputy ministers from holding such concurrent posts, thus, in his view, it does not violate the decision.
The issue was formally challenged before the Constitutional Court on May 5 by Juhaidy Rizaldy, executive director of Indonesia Law and Democracy Studies (ILDES). Juhaidy challenged Article 23 of the State Ministry Law, which prohibits ministers from concurrently serving as other state officials, commissioners or directors in state-owned or private enterprises, or leaders of organizations funded by the state and/or regional budgets.
Juhaidy argued that Constitutional Court Decision No. 80/2019 had already established that deputy ministers, being appointed by the president and serving roles equivalent to ministers, are subject to the same restrictions outlined in Article 23(b) of the State Ministry Law. Although not a criminal offense, Juhaidy emphasized that this inherent conflict of interest presents a serious vulnerability, particularly if unregulated, increasing the risks of power abuse.
This issue was previously raised in 2023 by anticorruption watchdog Indonesia Corruption Watch (ICW), which questioned the concurrent appointments of four deputy ministers and dozens of other ministry officials. At that time, the SOEs Ministry (34 individuals), Finance Ministry (18) and Public Works and Housing Ministry (nine) were cited for having the most bureaucrats in dual roles. Deputy ministers then serving as SOE commissioners included Rosan P. Roeslani (deputy SOEs minister) at Pertamina, Suahasil Nazara (deputy finance minister) at state-owned electricity company PLN, Muhammad Herindra (deputy defense minister) at PT Len Industri and Kartika Wirjoatmodjo (deputy SOEs minister) at Bank Rakyat Indonesia (BRI).
ICW argued that these dual roles violate Article 17(a) of Law No. 25/2009 on public services, which explicitly prohibits public servants from concurrently serving as commissioners or executives in business entities.
In 2023, Yeka Hendra Fatika, an Indonesian Ombudsman member, urged the government to address these "maladministration" cases to preserve public trust. The practice undeniably creates substantial potential for conflicts of interest and raises questions about officials' ability to effectively fulfill their public service responsibilities.
