Why MSCI’s Request Matters for Indonesia’s Stock Market Credibility

By Kusnandar & Co. Attorneys At Law – Jakarta, Indonesia

 

The recent request by MSCI, one of the world’s most influential index providers, for greater transparency in Indonesia’s stock ownership data should not be viewed as a mere technical issue. Instead, it reflects a deeper concern about the credibility, governance, and reliability of Indonesia’s capital market in the eyes of global investors. MSCI’s call for the Financial Services Authority (OJK) to disclose beneficial ownership (ultimate beneficial owner/UBO) data, including holdings below five percent, is a clear signal that transparency has become a non-negotiable standard in today’s global financial ecosystem.

 

This issue gained prominence following a sharp decline in Indonesia’s stock market, which even triggered a temporary trading halt. Market participants linked the volatility to MSCI’s assessment of Indonesia’s free float quality and ownership transparency—two critical indicators used to evaluate market investability. When investors are unable to clearly identify who ultimately controls listed shares, uncertainty increases. For global institutional investors, such uncertainty often translates into higher risk premiums or even capital withdrawal.

 

In this context, OJK’s response—committing to provide beneficial ownership data to MSCI, starting with major index constituents such as the IDX100—deserves recognition. The move signals that Indonesian regulators are willing to align with international best practices rather than adopt a defensive stance. Transparency is no longer just about regulatory compliance; it is about maintaining credibility in an increasingly competitive global capital market.

 

However, the decision to open beneficial ownership data also comes with significant challenges. Beneficial ownership information is inherently sensitive, as it reveals control structures that are often deliberately complex. In many cases, layered ownership is not only a business strategy but also a means of protecting privacy and commercial interests. Therefore, OJK must strike a careful balance between meeting global transparency standards and safeguarding legitimate data protection concerns. Transparency should strengthen trust, not create new vulnerabilities.

 

Beyond the immediate issue, MSCI’s request exposes a broader structural question: how mature is Indonesia’s capital market governance framework? While regulations on free float and disclosure already exist, MSCI’s concerns suggest that the available data may not sufficiently reflect the true ownership landscape. This highlights a gap not in regulation alone, but in data quality, consistency, and accessibility—factors that increasingly define a market’s standing at the international level.

 

The discussion around raising the minimum free float requirement to 15 percent further reinforces this point. If implemented effectively, such a policy could improve market liquidity, reduce price manipulation risks, and enhance overall market resilience. More importantly, it would signal that Indonesia is moving beyond symbolic reforms toward substantive improvements in market structure. For long-term investors, this kind of reform matters far more than short-term market fluctuations.

 

At the same time, the strong market reaction to MSCI’s assessment serves as a reminder of how interconnected Indonesia’s capital market is with global perceptions. MSCI’s influence is significant; its evaluations can affect portfolio allocations worth billions of dollars. Speculation about a potential downgrade in market classification—even if unlikely—illustrates how governance issues can quickly escalate into reputational risks if not addressed decisively.

 

Ultimately, OJK’s willingness to engage with MSCI on beneficial ownership transparency should be seen as a strategic opportunity. By improving disclosure standards and data integrity, Indonesia can strengthen investor confidence, reduce volatility driven by uncertainty, and enhance its position within global capital flows. The challenge lies in execution: transparency must be implemented carefully, consistently, and credibly. If done right, this moment could mark a meaningful step forward in Indonesia’s journey toward a more trusted and globally competitive capital market.

By : K&Co - January 30, 2026

Beyond Audits : Purbaya’s Hard Line on Tax Evasion and Illegal Economies

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

Finance Minister Purbaya Yudhi Sadewa’s decision to involve the Indonesian National Armed Forces (TNI) and the National Police (Polri) in dismantling protection networks (bekingan) behind tax evaders and illegal economic actors is a bold and noteworthy move. At a time when the government is under pressure to strengthen state revenue, this initiative signals that taxation is no longer treated merely as an administrative matter, but as a serious law-enforcement and governance issue with strategic implications.

 

For years, weak tax realization has often been attributed to high tax rates or low compliance awareness among taxpayers. Purbaya’s statement, however, exposes a deeper and more uncomfortable reality: the core problem lies not only with tax evaders themselves, but with systemic protection networks that allow them to operate with impunity. This is not a technical problem; it is an issue of institutional integrity that has long undermined the effectiveness of Indonesia’s fiscal policy.

 

The collaboration between the Ministry of Finance and state security institutions marks a paradigm shift in tax enforcement. It reflects a transition from routine audits and administrative sanctions toward a firmer, more comprehensive legal approach. Such a strategy aligns with broader anti-corruption efforts, which recognize that entrenched illegal practices can only be dismantled through cross-institutional cooperation capable of cutting off political, bureaucratic, and security backing.

 

This approach is particularly relevant in sectors such as illegal cigarette production and distribution, which has caused significant revenue leakage for years. In these cases, the presence of organized protection often renders conventional enforcement ineffective. Purbaya’s willingness to confront these interests suggests political courage — a readiness to disrupt long-standing arrangements and challenge powerful actors who have thrived in regulatory gray zones.

 

However, boldness alone will not guarantee success. The initiative faces serious structural challenges that must be addressed if it is to deliver lasting results. First, involving TNI and Polri should not be reduced to ad-hoc joint operations. It requires clear legal frameworks, precise division of authority, and disciplined coordination between fiscal authorities, law enforcement, and intelligence units. Past experience shows that coercive measures without strong institutional reform often produce only short-term gains, while leaving underlying problems intact.

 

Second, efforts to dismantle bekingan networks demand a high level of transparency and accountability. Public trust will hinge on whether enforcement is conducted consistently and without favoritism. If operations appear selective or politically motivated, public skepticism will grow, and the initiative risks being dismissed as rhetorical rather than transformative. Clear procedures, evidence-based actions, and external oversight are therefore essential.

 

Equally important is internal reform within the Ministry of Finance itself. Restructuring personnel in the Directorate General of Taxes and Customs is a necessary step, but it is not sufficient on its own. A deeper reform agenda must focus on strengthening internal controls, minimizing opportunities for data manipulation, and fostering a culture of integrity. Without this, external enforcement will merely compensate for weaknesses that should have been resolved internally.

 

Ultimately, the success of Purbaya’s strategy will be measured by public confidence. When citizens see that tax enforcement is fair, firm, and free from hidden protection, voluntary compliance is likely to improve. In that sense, tax reform is not only about boosting revenue, but about reinforcing the legitimacy of the state itself.

 

In conclusion, Purbaya’s decision to involve TNI and Polri sends a powerful signal that the government is serious about confronting long-standing obstacles to fiscal reform. Yet, this strategy will only succeed if it is accompanied by transparent implementation, strong inter-agency coordination, and sustained institutional reform. If these conditions are met, Indonesia may be entering a new chapter in credible and effective tax governance.

By : K&Co - January 28, 2026

Weather Modification and Jakarta’s Floods: A Helpful Tool, Not a Silver Bullet

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

Jakarta’s perennial flooding problem has once again pushed emergency responses into the spotlight. This time, Governor Pramono Anung’s claim that weather modification operations (OMC) can help suppress flooding has sparked renewed public debate. By intervening in rainfall patterns before extreme downpours reach the capital, the city government hopes to reduce flood risks during peak rainy periods. While the approach reflects a proactive use of technology, it also raises important questions about effectiveness, sustainability, and public expectations.

At first glance, weather modification sounds like a bold and modern solution. In simple terms, the operation aims to disperse rain clouds before they reach Jakarta by inducing rainfall over the sea or less vulnerable areas. If successful, this would reduce rainfall intensity over the city, easing pressure on rivers, drainage systems, and floodgates. From a crisis-management perspective, such measures appear reasonable—especially when meteorological forecasts predict prolonged heavy rainfall.

Indeed, past experiences suggest that weather modification can reduce rainfall intensity under certain conditions. Several operations in recent years have reportedly lowered precipitation levels in the Greater Jakarta area for limited periods. These outcomes support the governor’s argument that OMC can serve as a short-term mitigation tool, particularly when time is critical and conventional infrastructure responses are insufficient.

However, effectiveness is only one side of the equation. Weather systems are inherently complex and influenced by global and regional atmospheric dynamics. No weather modification effort can guarantee precise outcomes, especially during extreme climate events. When rainfall exceeds predictions or weather patterns shift unexpectedly, OMC’s impact may be minimal. This uncertainty means that weather modification should never be portrayed as a definitive solution to Jakarta’s flooding.

More importantly, floods in Jakarta are not caused by rainfall alone. Decades of rapid urbanization, inadequate drainage capacity, land subsidence, shrinking green spaces, and poor river management have turned heavy rain into a recurring disaster. Even if rainfall intensity is reduced, water will still accumulate if it has nowhere to go. Framing weather modification as a central solution risks oversimplifying a deeply structural problem.

There is also a political and social dimension to consider. Public communication matters. When authorities highlight advanced technologies, expectations can rise quickly. If floods persist despite weather modification efforts—as they likely will—public trust may erode. Citizens may perceive such measures as symbolic or even cosmetic, especially if they are not accompanied by visible improvements in infrastructure and long-term planning.

This does not mean weather modification should be dismissed altogether. On the contrary, it can be a useful component of an integrated flood mitigation strategy. In emergency situations, reducing rainfall by even a small margin can buy valuable time for pumps, reservoirs, and evacuation efforts. As a supplementary tool, OMC has its place.

Ultimately, the real test of Jakarta’s flood policy lies beyond the clouds. Sustainable solutions require consistent investment in drainage systems, river normalization, green open spaces, coastal protection, and stricter land-use regulations. Climate adaptation strategies must also account for rising sea levels and land subsidence, challenges that no amount of weather modification can fix.

In this context, Governor Pramono’s weather modification initiative should be viewed as a tactical response—not a strategic cure. Technology can help manage risk in the short term, but long-term resilience depends on structural reform and urban planning. Jakarta does not need miracles from the sky; it needs firm solutions on the ground.

By : K&Co - January 27, 2026

Beyond Symbolic Diplomacy: Why Restoring Indonesia’s National Parks Truly Matters

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The recent meeting between Indonesian President Prabowo Subianto and King Charles III of the United Kingdom is more than a moment of high-level diplomacy or a ceremonial exchange between two leaders. Behind the handshakes and formal smiles lies an important commitment: cooperation to improve and restore 57 national parks across Indonesia. In an era marked by climate change, biodiversity loss, and increasing ecological disasters, this agreement carries significance far beyond international protocol.

 

National parks are often viewed as protected spaces reserved for conservationists, researchers, or tourists. In reality, they are essential life-support systems. Indonesia’s national parks protect watersheds, regulate climate, preserve biodiversity, and sustain the livelihoods of millions of people living around them. When these ecosystems are degraded, the consequences are immediate and far-reaching—floods become more frequent, droughts intensify, wildlife disappears, and communities lose their sources of food, water, and income.

 

The commitment to restore 57 national parks sends an important message: environmental protection is no longer a side issue but a central pillar of national and international policy. King Charles III, long known for his environmental advocacy, brings moral authority and global attention to this effort. For Indonesia, partnering with the United Kingdom strengthens not only technical capacity but also international credibility in conservation efforts.

 

What makes this cooperation particularly meaningful is that it goes beyond abstract promises. Several conservation initiatives are already underway, including ecosystem restoration in areas such as Way Kambas National Park, which plays a critical role in protecting endangered Sumatran elephants. There is also attention to forest and landscape restoration in Aceh, reinforcing the idea that conservation must be grounded in real, measurable actions—not just diplomatic statements.

 

However, optimism should be accompanied by realism. Restoring national parks is not merely about funding or foreign partnerships. It requires strong governance, consistent law enforcement, and meaningful involvement of local communities. Without transparency and long-term commitment, even well-funded programs risk becoming temporary projects that fail to address structural problems such as illegal logging, land encroachment, and weak oversight.

 

This is where the broader meaning of the Prabowo–Charles meeting becomes clear. The agreement reflects a growing recognition that environmental protection is inseparable from social stability and economic resilience. Healthy ecosystems reduce disaster risks, support sustainable tourism, and provide long-term economic benefits that far outweigh short-term exploitation. In this sense, conservation is not an obstacle to development—it is a prerequisite for it.

 

Equally important is the role of communities living near national parks. Conservation efforts that exclude local voices often fail. Restoration must go hand in hand with improving livelihoods, respecting indigenous knowledge, and ensuring fair access to resources. When people see tangible benefits from conservation, they become its strongest defenders.

 

At a global level, this partnership also highlights the importance of shared responsibility. Climate change and biodiversity loss do not respect national borders. Cooperation between countries—especially those with historical, economic, and political influence—can help set stronger global standards for environmental governance.

 

Ultimately, the agreement to improve 57 national parks should not be remembered as a diplomatic headline, but as a turning point. Its success will be measured not by official statements, but by healthier forests, cleaner rivers, protected wildlife, and safer communities. If implemented with integrity and consistency, this cooperation could serve as a model for how diplomacy can move beyond symbolism and contribute meaningfully to the protection of our shared planet.

 

Protecting nature is not an act of charity toward the environment—it is an investment in humanity’s future.

By K&C - January 22, 2026

Money Changer Searches and the Integrity Test of Customs Law Enforcement

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The recent searches conducted by the Attorney General’s Office at several money changers in major shopping centers across Jakarta, in connection with the alleged corruption case involving the export of palm oil mill effluent (POME) at the Directorate General of Customs and Excise, mark a significant development in Indonesia’s anti-corruption enforcement landscape. This move reflects an increasingly assertive approach by law enforcement authorities, not only in uncovering acts of corruption but also in tracing the flow of illicit funds that arise from such crimes.

 

From a legal standpoint, the searches indicate that investigators are extending their focus beyond the alleged abuse of authority in export facilitation to the downstream financial transactions that may constitute money laundering. The seizure of funds in Singapore dollars and the indication that certain Customs officials personally exchanged cash without using identification suggest deliberate efforts to conceal the origin of illicit proceeds. Such conduct, if proven, would demonstrate a conscious attempt to circumvent both criminal law and financial regulatory safeguards.

 

Equally concerning is the alleged collusion between public officials and money changer operators. The practice of currency exchange without customer identification directly violates the principles of know your customer (KYC) and anti-money laundering (AML) compliance that underpin the integrity of the financial system. Money changers are not merely commercial entities; they serve as critical gatekeepers in preventing the circulation of proceeds of crime. When these obligations are ignored or intentionally bypassed, money changers risk becoming active facilitators rather than neutral service providers.

 

This case also highlights a deeper, structural problem within the governance of customs administration. Allegations that the funds originated from “the proceeds of crimes committed by several companies” underscore the persistent and unhealthy nexus between certain segments of the business community and public officials. Corruption in export-related processes not only distorts fair competition but also undermines state revenue and environmental governance, particularly in sectors linked to natural resources. For corporations, short-term gains achieved through bribery or illicit facilitation ultimately translate into long-term legal, financial, and reputational risks.

 

Although the Attorney General’s Office has yet to name suspects, the breadth of investigative actions—ranging from searches at the Customs headquarters to the residences of officials in Jakarta and other regions—demonstrates a methodical and evidence-based approach. The reliance on electronic evidence and financial trails is particularly important to ensure that prosecutions, when initiated, are grounded in solid proof rather than speculation or public pressure. This careful approach is essential to uphold due process while maintaining public confidence in the justice system.

 

Nevertheless, enforcement alone will not suffice if systemic vulnerabilities remain unaddressed. The POME export case should serve as a catalyst for broader institutional reform. Strengthening internal controls within Customs and Excise, enhancing transparency in export approval mechanisms, and ensuring strict supervision of financial service providers—including money changers—are critical steps to prevent similar cases from recurring. Regulatory bodies must also ensure that AML and KYC obligations are not treated as mere formalities, but as enforceable standards with real consequences for non-compliance.

 

Ultimately, the true measure of success in this case will not be limited to convictions or asset seizures. It will depend on whether the state can effectively dismantle the networks that enable corruption and money laundering to thrive. The searches of money changers represent an important starting point. The challenge ahead lies in ensuring that the legal process proceeds transparently, professionally, and consistently, while also driving meaningful reforms that restore public trust and reinforce the rule of law.

By : K&C - January 21, 2026

 

A Weakening Rupiah, Ministerial Optimism, and the Legal Test of State Policy Credibility

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The rupiah’s depreciation toward the psychological level of IDR 17,000 per US dollar is not merely an economic issue. It represents a serious test of the credibility of fiscal and monetary policymaking within Indonesia’s legal framework. Finance Minister Purbaya Yudhi Sadewa’s assertion that the rupiah’s weakness is temporary and will soon reverse due to improving fundamentals and foreign capital inflows deserves rigorous scrutiny—not only from an economic standpoint, but also from the perspective of constitutional law and public finance governance.

 

Executive Optimism Versus the Principle of Fiscal Prudence

 

Normatively, Article 23 of the 1945 Constitution of Indonesia mandates that state finances be managed in a responsible, transparent, and accountable manner for the greatest prosperity of the people. When the 2025 state budget deficit reaches 2.92 percent of GDP, approaching politically and economically sensitive thresholds, market anxiety is neither irrational nor speculative—it is a rational response to perceived fiscal risk.

 

In this context, government optimism that relies heavily on a record-high Composite Stock Price Index (IHSG) and the expectation of foreign inflows risks undermining the prudential principle that lies at the core of public financial law. The legal framework governing state finances does not permit policy decisions grounded in hopeful projections alone; it requires certainty, discipline, and policy consistency.

 

Central Bank Independence: More Than Mere Speculation

 

Minister Purbaya’s dismissal of concerns linking the rupiah’s depreciation to rumors surrounding the potential appointment of Thomas Djiwandono as Deputy Governor of Bank Indonesia (BI) must be examined through a legal lens. Law No. 23 of 1999 on Bank Indonesia, as amended, unequivocally guarantees the independence of the central bank from government and political influence.

 

However, financial markets do not operate on statutory assurances alone; they react to perceptions of institutional risk and conflicts of interest. When an individual with close familial ties to the President is rumored to be positioned for a strategic role within the central bank, investor unease is not a personal attack—it is a question of good governance and the rule of law. In administrative law, the principle of freedom from conflicts of interest is not merely ethical guidance but a prerequisite for the legitimacy of public policy.

 

To underestimate this sensitivity is to underestimate the legal importance of central bank independence itself.

 

Global Pressures Do Not Eliminate the State’s Legal Responsibility

 

It is undeniable that escalating geopolitical tensions, renewed trade wars, and the strengthening of the US dollar as a safe-haven asset have placed significant pressure on emerging market currencies. Yet from a legal-economic perspective, external shocks cannot serve as a justification for weak domestic policy responses.

 

The state—through the government and Bank Indonesia—bears a legal obligation to maintain monetary and fiscal stability. When extensive stimulus measures have already been deployed yet markets remain skeptical about the economy’s growth trajectory, the core issue lies not in the volume of intervention but in the clarity, coherence, and credibility of policy design and implementation.

 

The Rupiah and a Crisis of Legal Confidence

 

The current weakness of the rupiah reflects more than currency market volatility. It exposes a broader crisis of confidence in Indonesia’s legal and institutional economic framework. As long as government responses emphasize political reassurance over structural fiscal reform, strengthened governance, and uncompromising respect for central bank independence, the rupiah will remain vulnerable to both domestic and global shocks.

 

In a state governed by the rule of law, economic stability is not built on rhetoric. It is secured through legal certainty, fiscal discipline, and institutional integrity. Absent these foundations, optimism risks becoming little more than a fragile political narrative—easily dismantled by market realities.

By : K&Co - January 20, 2026

Waiting Too Long After the Disaster

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

Nearly two months after floods and landslides struck Aceh, North Sumatra, and West Sumatra, hundreds of thousands of people are still living in evacuation camps. They survive in temporary tents with very limited conditions. Time keeps moving forward, but a decent life has not yet arrived for them. Natural disasters may come suddenly, but slow and weak responses cannot continue to be justified.

According to data from the National Disaster Management Agency (BNPB) as of January 16, 2026, a total of 166,579 people remain displaced. This number shows how serious and unresolved the situation is. Children are getting sick more often, adults are exhausted, and many families are losing hope. The government is indeed building temporary shelters, but the progress is far from enough. Out of nearly 28,000 proposed units, fewer than 1,000 are ready to be occupied. This gap between need and reality is too large to ignore.

Not all survivors live in official evacuation camps. Some choose to stay with relatives because it feels safer. However, these people often receive even less attention. Because they are not registered as camp residents, they do not receive cash assistance from the government. Yet their daily needs do not disappear. They still need money for food, medicine, electricity, and their children’s needs. The state seems to only recognize visible suffering, while hidden hardship is left unattended.

The government says it is racing against time to complete the construction of temporary shelters. The goal is to reduce overcrowding in evacuation camps and provide healthier living conditions. However, the reality on the ground tells a different story. Thousands of families are still waiting without certainty. The target to finish the shelters before Ramadan only highlights how unprepared the system remains in responding to post-disaster recovery.

Life in the evacuation tents is far from comfortable. During the day, the heat is unbearable; at night, the cold becomes a problem. Many displaced people spend their days looking at the remains of their destroyed homes. Roofs are gone, walls have collapsed, and the houses are no longer livable. They know they cannot return, but they also do not know where to go next.

This situation is not only about natural disasters, but about state responsibility. When citizens are forced to live in tents for months, it reflects a failure in emergency and recovery management. Government efforts should be acknowledged, but they are meaningless if the results are not felt by the people.

The state must be present more quickly and more seriously. Children who are falling ill, families who have lost their homes, and citizens living without certainty cannot be asked to be patient forever. Disasters may be unavoidable, but prolonged suffering should never be.

By : K&Co - January 19, 2026

When Security Becomes a Pretext

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

What makes this development particularly alarming is its asymmetry of power and accountability. Civilian law enforcement agencies, including the Attorney General’s Office, are bound—at least in principle—by procedural safeguards, judicial oversight, and public scrutiny. The military, by contrast, operates under a different command structure and logic, one historically oriented toward threat neutralization rather than rights protection. When these logics intersect without clear legal boundaries, the result is not enhanced security, but diluted accountability. Responsibility becomes diffused, oversight becomes ambiguous, and abuses—should they occur—become harder to trace and contest.

 

The constitutional problem is therefore structural, not incidental. Indonesia’s post-Reformasi legal framework deliberately separated military functions from civilian governance to prevent precisely this kind of mission creep. The involvement of TNI in civilian prosecutorial activities, however “limited” or “temporary” it is claimed to be, reintroduces a parallel authority that sits uneasily within a constitutional democracy. It signals a regression from rule of law toward rule by managed force, where legality is preserved in form while its democratic substance quietly withers.

 

Equally concerning is the precedent being set for future cases. If the Attorney General’s Office can justify military involvement on the basis of “security” without a declared emergency, what prevents other civilian agencies from invoking the same rationale? Anti-corruption investigations, environmental disputes, land conflicts, or electoral matters could all be framed as “high-risk” and thus deserving of military presence. Once this logic is accepted, the threshold for militarization steadily lowers, until extraordinary measures become administratively convenient rather than constitutionally exceptional.

 

This trajectory also undermines public trust in law enforcement itself. A prosecution process guarded by soldiers does not project strength; it projects institutional insecurity. It suggests that civilian law enforcement lacks either the authority or the confidence to carry out its mandate without the implicit threat of armed force. In the long run, this weakens—not strengthens—the legitimacy of the justice system, as citizens begin to associate law enforcement not with fairness and due process, but with intimidation and power imbalance.

There is also a broader political economy at play. Cases involving natural resources, extractive industries, and strategic assets are often entangled with elite interests. The deployment of military force in such contexts risks creating the perception—whether accurate or not—that the state is aligning coercive power with particular economic outcomes. Even the appearance of such alignment is corrosive. Democracy depends not only on actual impartiality, but on the public belief that the law is applied without fear or favor. Militarized optics shatter that belief.

 

Silence from other oversight institutions compounds the danger. When parliament, civil society, and legal associations fail to challenge these practices decisively, normalization accelerates. What is left unsaid becomes as important as what is officially declared. The absence of robust institutional pushback allows executive discretion to expand unchecked, gradually redrawing the boundaries of acceptable state behavior.

 

At its core, this is a test of democratic maturity. A confident democracy does not need soldiers to carry files, nor does it rely on semantic acrobatics to justify the presence of guns in civilian offices. It relies on institutions that trust one another, laws that are enforced transparently, and officials who understand that restraint—not force—is the true measure of state strength.

 

If Indonesia is to honor the spirit of Reformasi, it must resist the quiet re-entry of military logic into civilian governance. The question is no longer whether this particular action was “legal” under a narrow interpretation, but whether it is compatible with the democratic future Indonesia claims to defend. History shows that once the line between civilian authority and military power is blurred, restoring it is far more difficult than crossing it. And by then, the erosion is no longer quiet—it is complete.

K&Co. - January 14, 2026

When Taxes Become Negotiable, Trust Is What’s at Stake

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

The Corruption Eradication Commission’s (KPK) search of the Directorate General of Taxes’ headquarters is far from a routine law enforcement move. This is not just about uncovering one corruption case; it strikes at the very heart of Indonesia’s state revenue system. Taxes, long promoted as the backbone of national development, are once again under scrutiny because of the actions of a handful of officials who chose personal gain over public trust.

The alleged bribery case involving tax reduction at the North Jakarta Medium Tax Office paints a troubling picture of how authority can turn into a bargaining chip. What began as a potential underpayment of roughly Rp75 billion in land and building tax ended with an official tax bill of only Rp15.7 billion. The gap is staggering. It represents not just lost state revenue, but also a serious blow to the credibility of the tax administration system.

The term “all in,” which surfaced during the investigation, sounds disturbingly casual for a process that should be governed strictly by law. Taxes are meant to be calculated based on clear regulations, not negotiated like a business deal. Yet this case reveals alleged fee arrangements, backroom agreements, and money distribution among insiders. The use of fictitious consulting contracts to channel bribe payments further suggests that this was not an impulsive act, but a well-planned scheme.

What makes this situation even more concerning is the broader impact on public trust. Law-abiding taxpayers—individuals and businesses alike—have every reason to feel frustrated. They pay their dues in full, on time, and without shortcuts. Meanwhile, cases like this create the perception that those with the right connections can simply “adjust” their tax obligations. When fairness is questioned, voluntary compliance—the very foundation of a healthy tax system—begins to erode.

KPK’s swift actions, from searches and evidence seizures to arrests, deserve recognition. They send a strong message that no institution is above the law. However, enforcement alone is not enough. This case should serve as a loud wake-up call for the Directorate General of Taxes to pursue genuine and comprehensive internal reform, not merely reactive measures once a scandal becomes public.

Tax reform cannot stop at slogans and digital banners. Internal oversight mechanisms must be strengthened, job rotations should be conducted transparently, and digital systems should be optimized to minimize direct, unmonitored interactions between tax officers and taxpayers. The fewer opportunities for “under-the-table” dealings, the better. Equally important are firm and consistent sanctions. Without real consequences, corruption risks becoming a recurring cycle rather than a preventable exception.

At its core, taxation is a form of collective responsibility. Citizens are asked to contribute to national development, and in return, the state is expected to manage those contributions with integrity and accountability. When taxes are illegally negotiated, what’s lost is not only money, but also confidence in the government’s ability to uphold justice.

This case should be a moment of collective reflection. Integrity within the tax authority is not optional—it is essential. Without it, no matter how sophisticated the regulations or systems may be, loopholes will always exist. And as long as those loopholes remain, public trust will continue to be the ultimate casualty.

K&Co - January 13, 2026

Behind the Pretext of “Security” : The Quiet Militarization of Civil Law Enforceme

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

Time and again, the public is asked to believe that the involvement of the Indonesian National Armed Forces (TNI) by the Attorney General’s Office is merely about “securing documents.” Yet this is precisely where the problem lies. The state has grown increasingly adept at blurring the line between civilian law enforcement and military presence through semantic maneuvering. When armed soldiers carry documents out of a civilian ministry, while authorities insist on calling it “data verification” rather than a “search,” public suspicion is not only justified—it is necessary. The concern is not merely about legal intent, but about how power is exercised, displayed, and communicated.

In a democratic system, language matters because it reflects intent and shapes public acceptance. By replacing terms like “search” with softer administrative phrases, the state attempts to neutralize public anxiety while maintaining extraordinary measures. This linguistic sanitization does not eliminate the coercive symbolism of military presence; it merely disguises it. The sight of uniformed soldiers performing tasks in civilian offices sends a message far louder than any press release.

The Attorney General’s claim that TNI involvement is “nothing new” only deepens the issue. Normalization is not justification. Indonesia’s 1998 Reformasi firmly established the principle of civilian supremacy, including in law enforcement. That principle was born from painful historical experience, when military dominance over civilian affairs eroded accountability and democratic control. When a civilian institution such as the prosecutorial system now feels compelled to “secure” an administrative process with military force, a fundamental question arises: is the state admitting the weakness of its own civilian apparatus, or quietly conditioning the public to accept the military’s return to civilian spaces?

The argument that documents might be “lost” or “misused” is equally troubling. If such suspicion is directed at a fellow state ministry, this is no longer simply a mining case in Konawe Utara—it is a reflection of a deeper crisis of trust among state institutions. The implicit message is stark: civilian bureaucracy cannot be trusted, therefore weapons must be present. This logic is dangerous, because it frames militarization not as an exception, but as a practical solution to administrative inefficiency.

Moreover, once security logic enters bureaucratic routines, it rarely retreats. What begins as “document protection” risks evolving into a default posture in sensitive cases, especially those involving large economic interests or political stakes. The result is a chilling effect on transparency, where the presence of armed personnel discourages scrutiny rather than ensuring integrity.

The Ministry of Forestry’s insistence that “no search took place” sounds defensive and overly legalistic. The public does not live solely within statutory definitions, but within visual and symbolic realities. When citizens witness soldiers transporting documents from a government office, the meaning conveyed is unmistakable: coercive state power is at work. If the state fails to grasp this perception and instead blames “social media narratives,” it reveals a widening gap between authority and the public’s sense of justice.

Ultimately, the core issue is not procedural legality, but the trajectory of habit being formed. Democracies do not collapse overnight; they erode through routines that go unquestioned. If every major case can be “secured” by military presence, civilian supremacy risks being reduced to mere rhetoric. Strong law enforcement is not upheld by the barrel of a gun, but by transparency, accountability, and the courage of civilian institutions to enforce the law independently. If this trajectory continues, what is at stake is not merely a single mining case—but the very character of democracy itself.

K&Co - January 9, 2026

The New KUHAP and KUHP : Legal Reform or Democratic Backsliding?

 By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The ongoing controversy surrounding Indonesia’s new Criminal Code (KUHP) and the proposed revision of the Criminal Procedure Code (KUHAP) is not merely a technical legal debate. It is a contest over the future direction of Indonesian democracy. While the government frames these reforms as modernization and decolonization of the legal system, many citizens see something far more troubling: an expansion of state power, a shrinking civic space, and a weakening of fundamental legal safeguards.

In principle, a new KUHP and KUHAP should function as complementary instruments. Substantive criminal law must be balanced by procedural law that rigorously protects individual rights. Yet what is emerging instead is a dangerous imbalance. The new KUHP introduces broad and vaguely defined offenses—ranging from insults against the president and state institutions to threats against public order—while the draft KUHAP fails to significantly strengthen oversight over law enforcement authorities.

One of the central concerns in the KUHAP debate is the expansion of discretion granted to investigators and prosecutors without adequate checks and balances. Provisions governing arrest, detention, search and seizure, and surveillance remain weak in safeguarding due process. The rights of suspects risk being treated as procedural formalities rather than as substantive guarantees against abuse.

In a democratic state governed by the rule of law, the criminal procedure code is the last line of defense between citizens and the coercive power of the state. If this line is compromised, even a well-intentioned criminal code can become a tool of repression. When vague criminal provisions are paired with permissive procedural rules, the result is not justice, but institutionalized criminalization.

Government officials often dismiss public concern by insisting that law enforcement agencies can be trusted to exercise their powers responsibly. This argument is deeply flawed. Law is not designed to rely on the goodwill of those in power, but on robust mechanisms of accountability. Indonesia’s own legal history—marked by the criminalization of activists, journalists, and ordinary citizens—demonstrates how unchecked authority inevitably invites abuse.

The controversy also reveals a widening gap between policymakers and social reality. Public participation in drafting the KUHAP has largely been symbolic rather than substantive. Input from civil society, academics, and legal practitioners is frequently sidelined as obstruction rather than embraced as a necessary safeguard. This is especially dangerous given that criminal law represents the most severe instrument of state power.

More troubling still is the cultural impact these reforms may produce. The combination of restrictive speech offenses and weak procedural protections risks normalizing repression. When criticism becomes punishable and legal processes fail to protect the accused, society learns a simple lesson: silence is safer than dissent. Democratic erosion then occurs not through dramatic authoritarian shifts, but through the slow accumulation of legal constraints.

True legal reform is not measured by the replacement of old statutes with new ones, but by the extent to which law restrains power and protects citizens. If the new KUHP and KUHAP fail to address today’s concerns, they will not represent progress. Instead, they will mark the modernization of repression—wrapped in the language of reform.

K&Co - January 8, 2026

Tax Relief and the Test of State Commitment

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

 

The decision by Finance Minister Purbaya Yudhi to exempt employees earning up to Rp 10 million per month from Article 21 Income Tax throughout 2026 signals a clear attempt by the state to stand with middle- and lower-income workers. At a time when global economic uncertainty persists and domestic recovery remains uneven, the policy reflects the government’s effort to safeguard purchasing power while maintaining social and economic stability.

Enshrined in Ministry of Finance Regulation (PMK) No. 105 of 2025, the policy places the burden of Article 21 income tax on the government for workers in five designated sectors: footwear, textiles and apparel, furniture, leather and related products, and tourism. These sectors are not chosen at random. They are labor-intensive industries that sit at the intersection of vulnerability and productivity—characterized by relatively modest wages, exposure to global demand shocks, and fluctuating business conditions.

By absorbing the tax obligation, the government effectively increases workers’ net income without imposing additional costs on employers. The mechanism—whereby the tax withheld is returned in cash to employees—ensures that the benefit is tangible rather than merely accounting-based. Given that household consumption remains the backbone of Indonesia’s economic growth, the multiplier effect of such a policy should not be underestimated.

Yet every fiscal stimulus carries trade-offs. The key question is not only who benefits, but also who is left out. While the Rp 10 million monthly income threshold appears inclusive, the sector-specific nature of the incentive raises concerns over horizontal equity. Workers with similar income levels and vulnerabilities in other sectors—such as logistics, the creative economy, or urban informal services—are excluded, despite facing comparable economic pressures.

Administrative requirements, including possession of a Taxpayer Identification Number (NPWP) or a National Identification Number (NIK) integrated with the Directorate General of Taxes’ system, also deserve attention. While these requirements align with the government’s long-term goal of strengthening tax administration and data integration, they may pose practical challenges. Non-permanent and freelance workers—the very groups this policy seeks to support—often operate in administrative gray areas. Without adequate outreach and assistance, the incentive risks being underutilized.

The policy further underscores the government’s evolving view of fiscal policy as a stabilization tool rather than merely a revenue-collection instrument. In certain circumstances, foregone revenue can be justified to prevent deeper economic contraction and social strain. The challenge lies in ensuring that such measures remain temporary, targeted, and subject to rigorous evaluation.

More fundamentally, tax relief should not become a substitute for deeper structural reforms. Expanding quality employment, strengthening protections for non-formal workers, and reforming wage-setting mechanisms remain essential. Fiscal stimulus can act as a buffer—it eases the burden—but it does not address the root causes of economic vulnerability.

Ultimately, the 2026 Article 21 tax exemption deserves recognition as a responsive and empathetic policy choice. It represents a tangible presence of the state in easing workers’ burdens. Its true test, however, will lie in consistent implementation, precise targeting, and the government’s willingness to complement short-term relief with long-term structural solutions.

K&C - January 8, 2026