The House of Representatives decision to select Thomas “Tommy” Djiwandono as a deputy governor of Bank Indonesia (BI) has reignited long-standing concerns over the central bank’s independence. His background as nephew of President Prabowo Subianto and a senior Gerindra Party official has contributed to negative market sentiment. While Tommy ensured the market that he would maintain BI’s independence, the controversy surrounding his nomination and swift confirmation risks undermining the central bank’s credibility and could adversely affect macroeconomic stability.

An Indonesian political standup-comedy show currently streaming on Netflix has become one of the top trending topics on social media these past few weeks, some calling the content inappropriate while others welcoming it as a fresh take on current affairs. And now police are stepping in following formal reports for defamation, incitement and blasphemy.

The new year marked a start to a journey for two new political parties, which have both set their sights on contesting the 2029 legislative and presidential elections. From the outset, the National Resonance Party (PGB) and the People’s Movement Party (PGR) have associated their identities with national figures widely seen as potential contenders in the 2029 presidential race. This emphasis on personal endorsement signals a shifting pattern in Indonesian politics, raising questions about whether parties are moving away from their foundational role as institutions for political education and cadre development.

The Financial Services Authority (OJK) has urged banks classified in core capital bank group (KBMI) 1, or banks with up to Rp 6 trillion (US$355 million) in capital, to strengthen their capital position or consolidate with other banks, as part of its longer-term aim to eliminate the KBMI 1 classification altogether. The policy aims to enhance banks’ capacity, performance and service quality and enable them to scale up while maintaining operational security and efficiency.

The government recently announced what appeared to be encouraging news for the country’s rice sector: the introduction of a single-price policy for medium-grade rice to be implemented nationwide this year, after he hailed the achievement of self-sufficiency in rice production. While politically attractive, the promise of a uniform rice price across the archipelago warrants closer scrutiny, particularly over whether the price stabilization policy can be sustained without continued reliance on imports or a risk of added fiscal costs.

President Prabowo Subianto inaugurated Pertamina’s Refinery Development Master Plan (RDMP) Balikpapan megaproject on Jan. 12, marking the completion of a long-delayed strategic oil refinery upgrade. The project, with an investment value of US$7.4 billion (Rp 123 trillion), is expected to raise production capacity to 360,000 barrels per day (bpd) from 260,000 bpd and enable Indonesia to stop importing diesel fuel as early as the second quarter of this year.

The Corruption Eradication Commission (KPK) has named former religious affairs minister Yaqut Cholil Qoumas a suspect in connection with alleged graft in the administration of the haj pilgrimage in 2024.

President Prabowo Subianto’s plan to give more power to the Indonesian Military (TNI) to counter terrorism raises the specter of Indonesia reverting to the days when the military practically ruled the country under President Soeharto for more than three decades.

The quality of Indonesia’s lawmaking is under growing scrutiny. The skyrocketing number of judicial review petitions should serve as a wake-up call to reform the legislative process. Meaningful public participation, in particular, remains a crucial element that must be strengthened to ensure laws are drafted with prudence, accountability and constitutional soundness.

The 2026 provincial minimum wage (UMP) announcements have triggered a backlash from both labor unions and businesses. On average, minimum wages rose by more than 5 percent year-on-year (yoy) compared with 2025. However, in most provinces, the final nominal wages remain below the basic cost of living (KHL), indicating a decline in real wages. This tension unfolds amid an economic slowdown, marked by persistent layoffs in labor-intensive sectors and weak household consumption.

Finance Minister Purbaya Yudhi Sadewa's recent decision to withdraw Rp 75 trillion (US$4.5 billion) from state-owned banks has reignited concerns over the coherence and consistency of Indonesia's fiscal strategy.

It should have been a no-brainer for Indonesia to condemn the United States for bombing Caracas and then seizing Venezuelan President Nicolás Maduro and First Lady Cilia Flores, flying them to New York to face drug trafficking charges. This was clearly an act of aggression against a sovereign country and a violation of international laws.

After decades of relying on Dutch colonial regulations, Indonesia finally has its own Criminal Code (KUHP), which came into effect on Jan. 2. While the government claims the new KUHP reflects modern legal standards, critics say it retains significant gaps, particularly regarding potential conflict between law enforcement practices and human rights protections.

Indonesia entered 2026 with an unusual fiscal blind spot. In the first week of the new year, the State Budget (APBN) 2026 Law had yet to be made publicly available, only appearing on the same day the Finance Ministry released its report on the 2025 APBN performance. More strikingly, Presidential Regulation (Perpres) No. 118/2025, which details the APBN and operationalizes the budget, has yet to surface at all.

The protracted disaster response in parts of Sumatra has increasingly become a focal point of public criticism, testing not only the state's operational capacity but also its willingness to engage with dissent. Rather than treating criticism as an essential component of democratic accountability, the government has often responded defensively, a posture that risks deepening public distrust at a time when confidence in state institutions is critical.

Indonesia may face a tax revenue shortfall this year, as recent data show the country had realized only 74.62 percent of its annual tax target as of November, underscoring mounting difficulties in sustaining revenue growth amid global and domestic economic headwinds. The World Bank Group (WBG) has projected Indonesia's tax ratio, the share of tax revenue in gross domestic product (GDP), to fall to 9.4 percent in 2025, down from 10.1 percent in 2024. The downward trend is a worrying signal for future state spending, particularly as the government rolls out costly flagship programs that risk widening the fiscal deficit.

The direct election mechanism as a way of choosing political leaders could become a thing of the past in Indonesia, starting with the election of the heads of regional administrations, but it could go all the way up to the election of the head of state.

Indonesia's ambition to strengthen its domestic steel industry is being quietly undermined from within. While policymakers continue to champion downstream industry development, industrial resilience and import substitution, recent findings by the Supreme Audit Agency (BPK) reveal troubling weaknesses in steel import governance. The problem extends beyond illegal imports, pointing instead to regulatory gaps, weak inter-ministerial coordination and administrative failures that continue to erode the credibility of Indonesia's industrial policy.

In a surprising turn of events to cap off the year, Nahdlatul Ulama (NU), Indonesia's largest Muslim organization, has been shaken by turmoil that many observers are calling an internal coup. At the center of the storm is the sudden political ousting of Yahya Cholil Staquf as chairman of NU’s executive body Tanfidziyah.

The national policy on export proceeds (DHE) from natural resources has been revised for a third time after repeated attempts failed to significantly bolster foreign exchange (forex) reserves or deepen onshore foreign currency liquidity. The latest revision relaxes the mandatory rupiah conversion requirement from 100 percent to 50 percent and requires the placement of DHE in Association of State-Owned Banks (Himbara) members. While this is intended to ease pressure on exporters, it raises questions about whether locking DHE onshore can be effective in the long run without undermining export competitiveness.

Rather than safeguarding justice, Indonesia's legal instruments are increasingly being bent to serve institutional interests. The standoff between the Constitutional Court (MK) and the National Police over the assignment of active officers to civilian posts exposes not merely regulatory inconsistency, but a deeper disregard for constitutional authority.

Indonesia's current account balance returned to a surplus in the third quarter (Q3) of 2025, but the improvement was overshadowed by one of the sharpest capital outflows in recent years. Bank Indonesia (BI) reported that the current account swung into a surplus of US$4 billion, or 1.1 percent of GDP, the first surplus in 10 months. However, this gain was more than offset by a steep financial account deficit of US$8.1 billion. As a result, Indonesia posted an overall balance of payments deficit of US$6.4 billion in Q3.

The administration of Prabowo Subianto is reforming the disbursement of fuel and electricity subsidies to improve state budget efficiency. These subsidies have long been criticized for disproportionately benefiting upper-middle-class households, who consume more energy, rather than the poor and vulnerable groups they are intended to support. As a result, the government now aims to better target subsidy distribution and reduce its long-standing fiscal burden. The urgency to optimize subsidy spending has also grown amid rising expenditures for several major government programs.

Grief has engulfed Sumatra. Flash floods and landslides have devastated the provinces of Aceh, North Sumatra and West Sumatra, leaving behind not only the ruins of homes and infrastructure but also the deepening realities of hunger, displacement and profound uncertainty. Yet the government's decision to slash disaster funding to its lowest level in years is now testing its ability to help the affected rebuild their lives.

After last month's controversial passage of the revised Criminal Law Procedures Code (KUHAP) bill, concerns have emerged regarding a significant legal loophole: wiretaps. Activists say that if left unchecked, law enforcement agencies like the National Police will have leeway to wiretap anyone at any time without formal mechanisms and restrictions once the KUHAP comes into force on Jan. 2.

The flash floods and landslides that ravaged Aceh, North Sumatra and West Sumatra should prompt far deeper scrutiny than they have so far received. While Cyclone Senyar intensified the rainfall, the scale of destruction reflects decades of unchecked ecological degradation that have left communities acutely exposed.

The Army is creating 750 new battalions of combat troops in the next four years to ensure presence in every district nationwide, but in the absence of a credible explanation of where the new external threats are coming from, the plan raises speculations about the real motive.