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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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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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Three government critics have been reported to the police for something they said in public while an online magazine has seen the circulation of an Instagram article restricted, further evidence of Indonesia’s shrinking civic space. These incidents happened not long after the March 12 acid attack against a human rights activist, an attack which the military and police have blamed on members of the Indonesian Military (TNI) intelligence agency.
The Military Police have yet to disclose the identity of the perpetrators or the motive for the acid attack against Andrie Yunus of the Commission for the Disappeared and Victims of Violence (Kontras), more than one month after the attack. The Military Police took over the investigation from the police’s hands the moment the latter found links to the TNI.
The public remains in the dark about the incident other than that four members of the TNI’s Strategic Intelligence Agency (BAIS) are under investigation, and that BAIS chief Lt. Gen. Yudi Abrimantyo resigned because of the attack but without disclosing his own role.
Civil society organizations are pressing for an independent investigation to be credible and for the perpetrators to be tried in a civilian court rather than a military tribunal.
Magdalene.co, an online feminist magazine, fell prey to official censorship when its Instagram article reporting on an independent investigation into Andrie’s attack was blocked to Indonesian users. The investigation, by a group of civil society organizations and also published in other news outlets, indicate a larger and sinister operation by the military, certainly involving more than the four alleged perpetrators.
The Communications and Digital Ministry restored the content after public protests, but not before stating that Magdalene is not a verified new media and therefore did not enjoy the protection accorded news media outlets and journalists under the 1999 Press Law.
The ministry invoked a degree issued in March by Minister Meutia Hafid, who is a former journalist, that allowed members of the public to call on the government to request social media platforms take down content that incited public unrest, within four hours of notification. Platforms risk losing their operating license if they fail to comply.
Meanwhile, Saiful Mujani, a political scholar and founding director of leading surveying agency Saiful Mujani Research and Consulting (SMRC), has endured widespread attacks on social media since his call for a people’s power movement to impeach President Prabowo Subianto.
Muhammad Qodari, a staff member of the Presidential Office, said that as a political scholar Saiful should have known better that his remarks for impeachment would fall outside the Constitution, and netizens quickly raised the ante to describe it as treason.
Soon enough, several private individuals and groups filed a criminal complaint with the Jakarta Police against Saiful, not for treason, which is punishable by 15 years in prison, but for inciting violence and insurrection, punishable by four years’ jail time. They also named Islah Bahrawi, an activist of the Nahdlatul Ulama Islamic mass organization and a long-time critic of the government, in the same dossier.
Ubedilah Badrun, a political scholar at University Negeri Jakarta, has also been reported to the police by private groups for questioning the legality of the 2024 election of Prabowo and running mate Gibran Rakabuming Raka, and for describing the pair as “burden on the state”.
The government is not short of friends and supporters who would do its bidding to counter government critics. This week, a group of drivers of app-based transportation services, staged a protest outside the SMRC office, demanding Saiful publicly apologize for his remarks about impeaching Prabowo.
These moves against critical voices followed President Prabowo’s March 13 remarks in a Cabinet meeting in which he threatened “to put in order” critics for being unpatriotic. Cabinet Secretary Teddy Indra Wijaya later followed this up with his claim that Indonesia is suffering from an ‘inflation” in the number of experts who choose to ignore the government’s many achievements and surveys that show the President enjoying high approval ratings.
Whether or not the instigators of the crackdown against government critics took their cue from the President, these episodes show the breadth of methods to silence them, from the use of terrorism as in the acid attack, the law as in the criminal reports filed with the police, to finding administrative/technical faults as in the case of censoring the magazine.
Usually, or historically at least, moves against government critics have chilling effects on other critics and media. In the absence of the government denouncing this online and offline harassment and even terrorism against government critics, these incidents are likely to increase.
