Sector

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

June 23, 2026

Students from Indonesia’s leading universities have once again taken to the streets in Jakarta and other major cities, about eight months after the last wave of mass protests turned violent. This time, they are specifically targeting President Prabowo Subianto’s leadership and governing style, which they blame for the country’s current economic difficulties.

Unlike in previous protests, however, the Indonesian Military (TNI) was deployed from the outset to help manage the situation amid growing calls from some government critics for political change. Despite a few minor scuffles, the demonstrations on June 12 remained largely peaceful, with both protesters and security forces exercising restraint.

Student leaders have vowed to return to the streets after giving Prabowo an opportunity to respond to their five-point list of demands. They also plan to reassess their strategy in light of the military’s involvement. The following Monday, additional student groups, joined by civil society organizations, staged demonstrations in Jakarta, suggesting that public dissatisfaction extends beyond university campuses.

The movement in Jakarta was led by the “Yellow Jackets,” a group of students from Universitas Indonesia, the country’s premier public university. They were joined by students from other public and private universities in the capital, as well as in several major cities across the country.

Under the banner “Toward a Bankrupt Indonesia,” the students are demanding that the government stop squandering state funds, reduce the prices of food and fuel and roll back the President’s flagship programs, including the free nutritious meal program and the establishment of the Red and White Rural Cooperatives program. They are also calling for an end to the military’s involvement in civilian affairs and for the President to acknowledge and take responsibility for policy mistakes.

The protests come amid an economic downturn marked by the rupiah’s decline to historic lows of more than Rp18,000 against the US dollar and a fall in the Jakarta stock market.

Analysts say that what began as a loss of confidence among foreign investors has spread to Indonesia’s middle class. The lower middle class, represented in part by the student movement, has expressed its frustration by taking to the streets. Analysts also point to an erosion of political confidence amid signs of shrinking civic space and the expanding role of the TNI in civilian affairs.

The protests last August targeted the House of Representatives over its perceived poor performance, particularly after legislators approved generous increases in their housing allowances. Students were soon joined by workers, and police attempts to crack down on the demonstrations led to violence that spiraled out of control. Prabowo subsequently ordered the military to help restore order.

This time, the military was deployed immediately as a backup force to assist the police.

In Jakarta, security forces were deployed to prevent students from staging their protest at the Hotel Indonesia Traffic Circle on Jalan Thamrin, the city’s main thoroughfare. Instead, they were directed toward the House of Representatives complex in Senayan. Student leaders, however, said the House was not their intended target.

Presidential Palace chief spokesman Mohammad Qodari said the students’ demands were broadly aligned with Prabowo’s efforts to make government spending more efficient and effective. He added that the free meals program was also under review following recent changes in the agency responsible for its implementation.

Qodari, however, did not address concerns about the military’s expanding role in civilian affairs, an issue that also featured prominently during the August protests.

For now, tensions remain contained. But with student leaders promising to reassess their strategy and public dissatisfaction showing few signs of easing, the prospect of renewed demonstrations cannot be ruled out.

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