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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

November 24, 2025

The House of Representatives has enacted the Criminal Law Procedures Code (KUHAP) bill in a significant move by the government to overhaul the colonial-era framework on Indonesia's criminal procedures, despite widespread objections.

Beyond debates over the substance of the new KUHAP, the concept of "meaningful participation" has become a point of contention. While the House insists it conducted extensive public consultations in drafting the bill, civil society organizations dispute this and accuse the legislature of misrepresenting the extent of public involvement.

Amid strong criticism from civil society groups and as students protested outside the Senayan Legislative Complex, the House passed the bill into law during a plenary session on Tuesday, marking a milestone in the country's criminal justice system: Deliberations on the KUHAP bill had stretched on since 2012, across multiple administrations and through shifting political landscapes.

Fundamentally, the KUHAP serves as the procedural framework on how law enforcement authorities, from the police to prosecutors, may exercise their powers.

Law Minister Supratman Andi Agtas, who led the government's engagement with the bill, said the new KUHAP and the new Criminal Code (KUHP) would both go into effect on Jan. 2, 2026. The KUHP was enacted in January 2023 with a three-year transition period. Supratman emphasized that the government would use the remaining time to draft around 18 implementing regulations, including three government regulations (PP).

One of the most debated provisions in the new law is Article 74A, which formalizes the "peace agreement" as a form of restorative justice. This mechanism may be initiated between perpetrator and victim(s) as early as the investigation stage. Civil society groups warn that this provision opens the door to coercion and extortion.

Habiburokhman, who chairs House Commission III overseeing law enforcement, rejected claims that the mechanism could be weaponized. He explained that under articles 74A and 79, while a peace agreement could be established during the investigation phase even before the criminal act was formally determined, the process was tightly regulated and left no room for individuals to exploit it for financial gain.

The government argues that restorative justice serves as an alternative means for resolving cases without resorting to formal court processes, which are often lengthy and disadvantageous to all parties. Immigration and Corrections Minister Agus Andrianto further noted that restorative justice prioritized resolution over retribution, and thus helped alleviate burdening the state with prison overcrowding.

Civil society groups have also pointed to significant concerns related to articles 7 and 8, which place all civil servant investigators (PPNS) under the coordination of the National Police. Critics say this structure grants the police disproportionate power and legitimizes arbitrary actions in relation to arrests, detentions and searches.

Commission III chair Habiburokhman dismissed these accusations, arguing that the new provisions introduced stricter safeguards. For example, they now required "two objective pieces of evidence" (preliminary evidence) before an arrest could be made, he said, whereas previous laws relied more heavily on officers' subjective assessment. He also clarified that wiretapping, freezing bank accounts and seizing communication devices were not indiscriminate police powers. Instead, such actions required judicial authorization under Article 135(2), while wiretapping would be regulated under a separate law.

Beyond the controversies over substantive elements in the KUHAP, its drafting process drew sharp criticism. Civil society groups alleged that lawmakers failed to uphold the principle of "meaningful participation" and reported 11 members of the bill's working committee to the House Ethics Council. Meanwhile, the civil society coalition Reformasi KUHAP accused the House of misusing its name to legitimize a flawed process.

Habiburokhman has denied allegations that the drafting process was rushed, saying that deliberations had been ongoing for nearly a year since Nov. 6, 2024. He also claimed that 99.9 percent of the revisions to the bill was based on public input.

Law minister Supratman has said that opposition is natural, and that lawmakers cannot accommodate every input put forth during the legislative process.

In separate remarks, Corruption Eradication Commission (KPK) chief Setyo Budiyanto said the new KUHAP would not affect the antigraft body's operations in any significant way.

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