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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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Nearly two years into his presidency, President Prabowo Subianto has moved decisively to tighten his grip on Indonesia’s two most powerful security institutions. A series of leadership changes at the National Police (Polri) and the Indonesian Military (TNI) this month have systematically reduced the residual influence of former president Joko “Jokowi” Widodo’s administration, realigning internal loyalties and strengthening presidential authority for the remainder of his term toward the 2029 elections.
The most immediate and sweeping action focused on the police force. On Oct. 1, Prabowo inaugurated Gen. Suyudi Ario Seto as the new police chief, replacing Gen. Listyo Sigit Prabowo, who had held the post since 2021 under the previous administration. The appointment of the former National Narcotics Agency head received rapid legislative approval and Suyudi was sworn in the same day alongside a new deputy, Wahyu Hadiningrat. Within 24 hours, Suyudi launched the first of three major personnel reshuffles.
On Oct. 2, he moved 88 senior and mid-ranking officers, 70 of whom received promotions or new posts. This included 14 key positions at the National Police headquarters, among them the supervision inspector general, the intelligence and security head, the criminal investigation head and the security maintenance head. In addition, 19 regional police chiefs were appointed, including the critical post of Jakarta Police chief. The second wave on Oct. 10 shifted another 199 officers, and the third on Oct. 12 adjusted 12 more. In total, nearly 300 officers were reassigned in the first two weeks, placing Prabowo-aligned figures in the force’s most strategic operational and territorial posts.
The TNI requires a more measured approach, and Prabowo has not yet replaced the current chief, Jokowi appointee Gen. Agus Subiyanto. As a former Army general himself, Prabowo understands the value of observing institutional procedures and traditional promotion pathways even while exercising his constitutional authority.
On Oct. 15, he orchestrated a carefully sequenced swap at the top of the Army hierarchy: Gen. Maruli Simanjuntak was appointed TNI deputy commander and concurrent head of the National Border and Remote Area Management Agency (BNPPDT). Maruli’s previous post as Army chief of staff was filled by former deputy commander Gen. Tandyo Budi Revita. In addition, several senior military officers were moved into strategic civilian-linked roles, including deputy defense minister.
Traditionally, being appointed Army chief of staff has been the most common pathway to becoming TNI commander. By repositioning these figures, Prabowo is shaping the succession pool while respecting existing mechanisms. Both Agus and Maruli are Jokowi-era appointees, so their eventual replacement is widely regarded as a matter of time.
The TNI and the National Police operate through deep patronage systems in which career advancement, postings and access to resources generate both personal and institutional loyalty. Until recently, the upper echelons of the two institutions were dominated by officers whose rose under Jokowi. The changes earlier this month systematically insert officers whose networks and careers align more closely with Prabowo.
Both institutions are powerful political actors capable of leveraging their territorial presence, coercive capacity and information networks against any sitting president; therefore, full reconfiguration of their leadership has required patience. Prabowo took roughly two years to reach this stage, by first consolidating broader governing coalitions and expanding military roles in civilian programs, and then moving on the police and army hierarchies. Residual Jokowi influence had persisted through senior security roles: The recent reshuffles and the anticipated TNI chief succession are designed to dismantle that leverage.
It is almost certain that Prabowo will give the top military post to an Army figure, ignoring an unwritten convention that the three military services, the Army, the Navy and the Air Force, take turns. While it should really be the Air Force’s turn, this convention has been broken many times in the past to favor the Army, the largest and most powerful of the three.
Once Prabowo installs a new TNI chief, he will exercise comprehensive operational and political command over both security institutions, and loyalty will no longer be filtered through holdover networks. This consolidated control strengthens governance capacity for the remaining three years of his term and creates a more reliable institutional foundation for the 2029 electoral cycle and beyond, reducing the risk that security sector actors could function as independent power centers or become leverage points for rival political forces.
In short, the October 2026 changes, swift and extensive at the National Police and preparatory and sequential at the TNI, represent a methodical consolidation of presidential authority over the country’s primary instruments of coercion and territorial control. By combining constitutional power with respect for institutional procedure and by systematically realigning patronage networks, Prabowo is converting formal authority into practical loyalty that serves both immediate governance needs and longer-term political continuity.
