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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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President Prabowo Subianto visited former president and Indonesian Democratic Party of Struggle (PDI-P) chairwoman Megawati Soekarnoputri on the occasion of the Idul Fitri holiday. The meeting on April 7 marked an important rapprochement between the two figures that would define the country’s political dynamics in the future.
Nevertheless, the close encounter, which lasted 90 minutes, did not result in a specific agreement, although further follow-up could be expected.
The long-awaited meeting came after several rounds of lobbying between the PDI-P and Prabowo’s Gerindra Party elites. The two were expected to hold talks before Prabowo took office on Oct. 20 last year, with the hope that the PDI-P would join the grand ruling coalition.
Until today, the PDI-P is the only party that opts to stay out of the government, making it impossible for it to effectively engage the checks and balances mechanism.
Prabowo met Megawati at her residence on Jl. Teuku Umar in the upmarket Central Jakarta area of Menteng. Several PDI-P and Gerindra Party top executives were seen present at the big house, but did not take part in the Prabowo-Megawati conversation.
Prabowo has built a close relationship with Megawati following their collaboration in the 2009 presidential election. Back then Megawati ran for president, with Prabowo as her running mate. The pair lost to Susilo Bambang Yudhoyono, who partnered with Jusuf Kalla.
Despite the flopped presidential bid, Megawati and Prabowo continued their collaboration in the Jakarta election in 2012, which was won by Joko “Jokowi” Widodo of the PDI-P and his running mate Basuki “Ahok” Tjahaja Purnama of Gerindra.
Ties between the PDI-P and Gerindra began to sever after Megawati endorsed Jokowi’s presidential bid in 2014, who eventually beat Prabowo in the divisive, see-saw race. Jokowi prevailed in the rematch in 2019, but brought Prabowo into his government as defense minister.
The PDI-P labeled Jokowi as a traitor for supporting Prabowo, instead of Megawati’s choice of Ganjar Pranowo, in the 2024 presidential election, which Prabowo won. To cap the severed ties between the PDI-P and Jokowi, the party dismissed the former president early this year.
Both PDI-P and Gerindra elites, however, claim that ties between Prabowo and Megawati have remained well-maintained despite the rivalry in the presidential race.
Prabowo and Megawati each have their respective interests, as the former would need support from the PDI-P, which has never declared its clear political stance toward the Prabowo administration, while the latter has to ensure the PDI-P does not get troubled by parties that try to challenge her leadership.
The corruption case involving PDI-P secretary-general Hasto Kristiyanto, who has been arrested by the Corruption Eradication Commission (KPK), is a clear sign for the party to be prepared for any turbulence.
The PDI-P's interest in protecting Prabowo has never been greater, as the party's congress, originally scheduled for April this year, will decide the future of Megawati's leadership.
In addition, Jokowi, who has no political vehicle after having been closely connected to the Golkar Party and ProJo, the largest group of Jokowi’s supporters that has been rumored to be a political party, appreciated the meeting for the sake of the state’s interests.
Sufmi Dasco Ahmad, Gerindra’s executive chairman and House deputy speaker, stated that Prabowo has full independence to meet anyone, including Megawati, and would not need anyone’s permission, including Jokowi’s, to do so. Hence, Prabowo did not notify Jokowi in advance about his meeting with Megawati.
Eddy Soeparno, the National Mandate Party executive, is convinced that the Prabowo-Megawati meeting would signal the PDI-P's support without its direct involvement in Prabowo’s cabinet, the same stance as the NasDem, which has declared its support for Prabowo’s administration without having any of its representatives in the cabinet.
Puan Maharani, House Speaker and Megawati’s daughter, stated that Prabowo and Megawati would have follow-up meetings in the future.
