Rupiah Under Pressure : A Test of Indonesia’s Economic Resilience

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

 

The Middle East conflict has flared up again after attacks on Iran, sending shockwaves through global financial markets. Investors are flocking to safe-haven assets like the US dollar and gold, leaving emerging markets, including Indonesia, vulnerable. The rupiah has felt the impact, weakening against the dollar in recent trading sessions.

In this situation, the role of Bank Indonesia is crucial. BI has pledged to maintain rupiah stability through interventions in the foreign exchange market, including spot transactions and derivative instruments. This is not just a technical routine—it signals that the state is ready to uphold economic stability amid global uncertainty.

Many might wonder: why does a conflict in the Middle East affect the rupiah? The answer lies in global financial interconnectedness. When geopolitical risks rise, investors tend to reduce exposure to emerging-market assets and move capital into what they perceive as safer assets, like the US dollar. This increases demand for the dollar while putting downward pressure on currencies like the rupiah.

However, it is important to note that the rupiah’s weakening in this context does not necessarily reflect weak domestic fundamentals. Rather, it is a sentiment-driven reaction. As long as inflation is controlled, foreign reserves are sufficient, and economic growth remains stable, external pressures are usually temporary.

This is where the credibility of the central bank is tested. BI is not just managing exchange rates; it is maintaining market confidence. When markets trust that the central bank has the tools and willingness to act, volatility can be mitigated. Confidence, in modern financial systems, is the most valuable currency.

Of course, interventions are not a long-term solution to all external pressures. Rupiah stability also depends on the strength of Indonesia’s domestic economy. Diversifying exports, reducing energy import dependency, and strengthening industrial and downstream sectors are crucial to lowering vulnerability to external shocks.

Global conflicts are beyond Indonesia’s control. The country cannot stop wars or dictate international politics. But what it can control is policy response and the resilience of its economic system. With careful, measured, and consistent policies, external shocks can be absorbed without triggering a crisis.

This moment should also serve as a reminder: economic stability is not automatic. It is built on fiscal discipline, credible monetary policy, and public trust. When these are balanced, even global turbulence cannot easily shake domestic foundations.

Pressure on the rupiah from international conflicts is real and should not be ignored—but panic is not the answer. What is needed is vigilance, coordinated policy, and clear communication to the public.

Ultimately, this is about more than just exchange rates. It is a test of Indonesia’s economic resilience in an increasingly uncertain world. With strong fundamentals, global storms can be weathered. With weak foundations, even minor shocks can escalate into major crises.

Right now, that test is underway.

By : K&Co - March 2, 2026

Internet Quota : A Right or Just an Active Period?

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

The recent decision by Indonesia’s Constitutional Court to reject the judicial review against the unilateral internet quota expiration scheme marks a pivotal moment in the ongoing debate over digital rights, consumer protection, and regulatory fairness in the digital economy. While the ruling might reflect judicial restraint and deference to legislative discretion, it also highlights a broader challenge: ensuring that laws keep pace with how modern society uses digital resources and how these resources have become essential to daily life and livelihood.

At the core of the case were consumers — including a ride-hailing driver and a food vendor — who argued that unused internet data, once paid for, should not simply vanish without clear justification or compensation. For many digital service users today, internet data is not a luxury; it is a tool of trade, essential to earning income and staying connected. In this context, losing unused data because of arbitrary time limits imposed by service providers feels, understandably, like a loss of both value and justice.

Critics of the current system have drawn comparisons to prepaid electricity tokens, where unused kilowatt-hours can be consumed at any later time without expiry. The logic is compelling: if customers pay in advance for a quantifiable good, they should retain access to that good until it is exhausted, regardless of arbitrary time constraints. While telecommunications and energy operate on different technical frameworks, the public perception of fairness can’t be ignored.

The Constitutional Court’s decision to reject the review does not mean the issue is unimportant — it simply delays a possible substantive debate on how consumers are protected under evolving digital service models. The ruling might signal that the Court believes legislative judgment should stand unless it clearly violates constitutional guarantees. However, unanswered questions about consumer rights, economic fairness, and how digital services are regulated remain pressing.

One of the central concerns is the power imbalance between telecommunications companies and everyday users. Operators, under the current framework, retain significant discretionary authority to design products and expiration schemes. Meanwhile, users shoulder the consequences, often with limited options or awareness of how these schemes are structured. This imbalance is symptomatic of a broader issue in digital consumer markets: regulations often lag behind market innovation, leaving consumers exposed.

Economists and consumer advocates also warn that while mandatory data rollover or refund schemes might impose costs on operators, these should be examined within a broader social lens. Digital access has become intertwined with access to economic opportunity, education, and civic participation. If data expiration policies disproportionately affect low-income users who cannot afford frequent renewals, then regulatory frameworks should evolve to protect equitable access.

Ultimately, the Constitutional Court’s refusal to revise the law should not be the end of this conversation — but rather a call to deepen it. Lawmakers, regulators, industry stakeholders, and civil society must work together to craft policies that reflect the realities of digital life in the 21st century. Transparency, fairness, and consumer protection should be at the forefront, ensuring that the benefits of digital connectivity are shared broadly and justly, not limited by outdated norms or unchecked corporate discretion.

The debate is far from over — and for the sake of fairness and digital dignity, it should not be.

By : K&Co - March 2, 2026

The Trade Gatekeeper and the Fragility of State Integrity

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

 

The arrest of Budiman Bayu Prasojo by the Komisi Pemberantasan Korupsi (KPK) at the headquarters of the Direktorat Jenderal Bea dan Cukai is not merely another law-enforcement headline. It is a stark reminder of a deeper irony within state governance: the very institution entrusted with guarding the nation’s trade flows and securing state revenue is once again entangled in allegations of corruption. This episode does more than expose an individual—it highlights structural vulnerabilities that continue to haunt strategic public institutions.

Customs and Excise occupies a critical position in Indonesia’s economic architecture. It regulates imports and exports, safeguards tariff compliance, and protects domestic markets from illicit goods. When officials within such an institution are suspected of bribery or illicit gratification, the damage extends far beyond personal misconduct. State revenues may erode, compliant businesses suffer unfair competition, and illegal goods gain privileged access. In this context, corruption is not a mere administrative offense; it is an assault on economic justice and national credibility.

The fact that the arrest reportedly took place at the central office sends a strong symbolic message: no institutional space should be immune from accountability. Yet symbolism alone cannot substitute for systemic reform. The recurring emergence of corruption cases within the same sector raises a pressing question—why do such practices persist despite repeated enforcement actions? If internal controls were sufficiently robust and compliance systems genuinely effective, irregularities should be detected long before they escalate into criminal investigations. The repetition of scandals suggests that structural loopholes remain open.

The core problem lies not solely with individuals but with the ecosystem of authority in which they operate. Customs administration inherently involves discretion—valuation decisions, inspection prioritization, and clearance approvals. Without rigorous transparency and comprehensive digitalization, such discretion can evolve into negotiation space. Where manual processes and face-to-face interactions dominate, opportunities for illicit arrangements inevitably arise. Bureaucratic reform must therefore move beyond integrity slogans and toward systemic redesign that narrows the margin for abuse.

It is tempting to interpret each high-profile arrest as proof that anti-corruption efforts are working. To an extent, this is true. Enforcement matters. However, genuine success is not measured by the number of officials detained but by the shrinking probability of corruption itself. If similar patterns continue to surface within the same institution, the focus must shift from individual culpability to organizational culture and oversight architecture.

The KPK is fulfilling its reactive mandate—investigating, prosecuting, and deterring misconduct. Yet reactive enforcement, by definition, operates after harm has occurred. The next challenge lies with policymakers and institutional leaders to ensure that preventive mechanisms become more powerful than punitive ones. Without comprehensive reform—strengthened internal audits, data-driven risk management, transparent clearance systems, and uncompromising accountability—the public will merely witness a cycle of scandal, arrest, reform rhetoric, and renewed scandal.

This case should serve as a moment of reflection rather than fleeting spectacle. Public trust in state institutions is built not on declarations but on consistent integrity. When corruption allegations repeatedly strike agencies at the heart of national economic governance, what erodes is not only personal reputation but institutional legitimacy. Indonesia does not lack regulations; it requires the political and administrative courage to reduce discretionary opacity and fortify systemic safeguards until corruption becomes not merely risky, but structurally improbable.

Otherwise, each arrest will remain just another chapter in a recurring narrative—dramatic, necessary, yet fundamentally incomplete.

By : K&Co - February 27, 2026

BPR Consolidation : Genuine Reform or Structural Camouflage?

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

The decision by Otoritas Jasa Keuangan (OJK) to approve the merger of four rural banks (BPR) in West Java into PT BPR Nusamba Tanjungsari is more than a routine corporate action. It signals a clear regulatory direction: the BPR industry must shrink in number to grow in strength. Consolidation has become the chosen prescription.

In theory, the rationale is compelling. BPRs operate under significant pressure—limited capital buffers, fluctuating non-performing loans, weak competitiveness against commercial banks and fintech lenders, and the high cost of digital transformation. Economies of scale promise efficiency, stronger capital structures, and broader lending capacity. From a regulatory standpoint, fewer and larger entities are easier to supervise and potentially more resilient.

But public policy must not stop at theoretical elegance. The central question remains: does consolidation cure the illness, or merely move multiple patients into a single ward?

Merging small institutions that share similar structural weaknesses does not automatically produce a healthy institution. If the core problems lie in weak governance, inadequate internal controls, politically entangled ownership structures, or lax credit underwriting standards, then a merger simply aggregates risk rather than eliminates it. Four fragile institutions combined do not magically become one robust institution; they may simply become one larger fragile entity.

There is also the danger of creating an illusion of stability. A larger balance sheet may appear stronger. Capital figures may look more convincing. Operational structures may seem more streamlined. Yet without a fundamental shift in risk culture, transparency, and accountability, the newly consolidated entity could become more systemically sensitive at the local level. A single failure would have broader repercussions than the collapse of several smaller, isolated institutions.

This is where sharp criticism becomes necessary: consolidation risks becoming a regulatory shortcut. Instead of rigorously addressing governance deficiencies, strengthening supervisory enforcement, and forcing deep internal reform, structural simplification is presented as the primary solution. Yet the real challenges are deeply rooted—human capital quality, integrity of management, risk assessment discipline, and long-term strategic viability.

BPRs have historically derived their strength from proximity. Their intimate understanding of local communities and micro-entrepreneurs allowed them to extend credit based on contextual knowledge rather than rigid algorithms. Consolidation, however, often leads to centralized decision-making and bureaucratic standardization. Credit processes become more procedural and less relational. In attempting to professionalize, BPRs may lose the very social capital that once differentiated them from larger banks.

More concerning is the moral hazard dimension. If market participants perceive consolidation as an implicit safety mechanism—an eventual regulatory “rescue through merger”—managerial discipline may erode. Shareholders and executives could take excessive risks, assuming that structural absorption will mitigate consequences. In such an environment, market accountability weakens, and systemic fragility quietly grows.

OJK’s argument for consolidation is not without merit. Industry fragmentation complicates oversight and increases vulnerability to localized failures. However, consolidation must complement, not substitute, strict supervision. Without comprehensive asset quality reviews, transparent due diligence, and enforceable governance reform, mergers risk becoming cosmetic rearrangements rather than substantive restructuring.

The BPR industry does not merely need larger legal entities; it needs a governance revolution. Digitalization must extend beyond mobile applications into integrated risk management systems. Capital strengthening must reflect genuine loss-absorbing capacity, not symbolic compliance. Most importantly, commitment to grassroots economic empowerment must not be sacrificed on the altar of structural efficiency.

If this consolidation marks the beginning of deep institutional reform—professionalized management, uncompromising oversight, and transparent accountability—then it deserves support. But if it merely repackages structural weaknesses into a more orderly configuration, it postpones rather than resolves risk.

A bigger BPR is not necessarily a stronger BPR. Strength lies in discipline, integrity, and sustainable governance—not in size alone.

By : K&Co - February 27, 2026

 

RI–US Trade Deal : Expanding Access or Creating New Risks?

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

 

The public debate surrounding the ratification of the Agreement on Reciprocal Trade (ART) between Indonesia and the United States has grown increasingly intense. What initially appeared to be a strategic economic breakthrough is now facing scrutiny from civil society, particularly the Center of Economic and Law Studies (Celios), which has formally submitted objections to President Prabowo Subianto. The concerns raised go beyond technical trade clauses; they touch on fundamental questions of economic sovereignty, regulatory authority, and democratic process.

The ART agreement is presented by the government as a significant step forward in strengthening Indonesia’s trade relations with the United States. Expanded market access, potential tariff reductions, and increased export opportunities for Indonesian goods are central to its promise. In a global environment marked by protectionism and geopolitical tension, securing preferential access to one of the world’s largest consumer markets is understandably attractive.

However, economic diplomacy must be assessed not only by its projected benefits but also by its structural implications. Celios has reportedly outlined 21 substantive objections, including concerns over increased energy imports, the relaxation of non-tariff barriers, and the possible weakening of domestic content requirements. Critics argue that such provisions may disproportionately advantage foreign producers while placing additional strain on Indonesia’s domestic industries, particularly small and medium enterprises that are less equipped to compete with large multinational corporations.

One of the core issues raised is regulatory balance. Trade liberalization, while essential for competitiveness, should not come at the expense of national policy autonomy. For example, domestic content requirements have historically been used as instruments of industrial policy to strengthen local supply chains and encourage technology transfer. If such measures are diluted without adequate safeguards, Indonesia risks reinforcing dependency rather than fostering resilience.

Another area of concern involves data governance and regulatory standards. As cross-border digital trade expands, agreements that affect data flows and regulatory recognition must be carefully aligned with national legal frameworks. Any perceived mismatch between international commitments and domestic legislation could create legal uncertainty, potentially inviting disputes and undermining investor confidence.

Beyond substance, there is also the procedural dimension. Under Indonesian law, international agreements that significantly affect sovereignty, public finance, or fundamental rights typically require parliamentary involvement. A transparent and participatory ratification process is not merely a formal requirement; it is a democratic safeguard. Broad consultation with stakeholders—ranging from industry associations to labor groups—can strengthen the legitimacy and durability of any international commitment.

This debate reflects a broader tension facing many emerging economies: how to integrate more deeply into global markets while safeguarding domestic priorities. The choice is not between isolation and openness. Rather, it is about negotiating from a position of strategic clarity. Trade agreements must serve as instruments of national development, not ends in themselves.

Constructive criticism, such as that voiced by Celios, should therefore be seen as part of a healthy democratic ecosystem. Scrutiny does not equate to opposition to trade; instead, it signals the importance of ensuring that agreements are balanced, transparent, and aligned with long-term development goals.

Ultimately, the ART agreement represents both opportunity and responsibility. If carefully calibrated, it could enhance Indonesia’s export competitiveness and strengthen bilateral ties. If inadequately scrutinized, it could generate unintended economic and legal consequences. The path forward requires not only diplomatic agility but also institutional rigor—ensuring that trade expansion proceeds hand in hand with economic sovereignty, regulatory coherence, and democratic accountability.

By : K&Co - February 25, 2026

The Hidden Costs of Flag Borrowing in Public Procurement

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

 

The ongoing investigation by the Komisi Pemberantasan Korupsi (KPK) into alleged corruption in the advertising procurement process at Bank Pembangunan Daerah Jawa Barat dan Banten (Bank BJB) has once again brought public attention to a recurring corporate malpractice commonly referred to as “flag borrowing.” While this scheme has long existed in certain business practices, its presence within a regionally owned bank raises profound legal and governance concerns.

From the perspective of Kusnandar & Co., a law firm specializing in corporate governance and regulatory compliance, “flag borrowing” is far more than a procedural irregularity. It is potentially a structured mechanism designed to circumvent procurement requirements, conceal the actual controlling parties behind a contract, and distort fair competition. When such practices occur within a state-owned or regionally owned enterprise, the legal implications extend beyond corporate misconduct into the realm of public accountability and anti-corruption enforcement.

Legally, the “flag borrowing” scheme may trigger multiple layers of liability. First, it undermines the principle of fair competition by creating the illusion of legitimate participation in a tender process. A procurement process that appears competitive on paper may in fact be pre-arranged, thereby defeating the transparency and equal opportunity principles that govern public contracting. Second, if a corporate identity is used without proper authorization or to mask the fact that the true executing party does not meet regulatory qualifications, such conduct could constitute document misuse, misrepresentation, or fraud. Third, within a public financial institution, any facilitation or tolerance of such a scheme may amount to abuse of authority, particularly if decision-makers knowingly allowed irregularities to proceed.

As a regional development bank, Bank BJB is not merely a commercial entity; it is also an institution entrusted with public resources. Its board of directors and commissioners owe fiduciary duties to ensure that every allocation of funds aligns with legal standards and the best interests of the institution. If the investigation establishes that senior officials were aware of, or negligently ignored, irregular procurement practices, liability may extend beyond operational staff to those responsible for oversight and governance.

This case also highlights the inherent vulnerabilities in procuring intangible services such as advertising. Unlike infrastructure projects with measurable physical outputs, advertising services often involve performance metrics that are less tangible—media exposure, branding value, or campaign impact. Such ambiguity can create room for inflated pricing, manipulated deliverables, or preferential arrangements. When combined with a “flag borrowing” arrangement, the risk of financial loss and regulatory evasion significantly increases.

In our view, enforcement alone will not be sufficient. While criminal prosecution and asset recovery are essential components of accountability, systemic reform is equally critical. Strengthening internal control mechanisms within regionally owned enterprises, mandating disclosure of beneficial ownership for all vendors, and implementing transparent conflict-of-interest declarations for executives should become standard safeguards. Independent audits must also go beyond formal documentation reviews to assess substantive compliance and value for money.

The broader lesson from this case is that corporate integrity cannot rely solely on written procedures. Effective governance requires an institutional culture that prioritizes compliance and transparency over short-term gains. Without structural improvements, similar schemes will continue to evolve and exploit regulatory loopholes.

Ultimately, the alleged corruption in Bank BJB’s advertising procurement serves as a stark reminder that public trust is built on accountable management of public funds. “Flag borrowing” is not a harmless administrative shortcut; it is a distortion of the legal framework designed to ensure fairness and responsibility. As a nation committed to the rule of law, Indonesia must treat such practices not as technicalities, but as serious breaches that undermine both economic integrity and institutional credibility.

By : K&Co - February 25, 2026

Reforming Indonesia’s National Health Insurance Through Debt Relief

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

 

The government’s plan to write off Rp 26.47 trillion in overdue BPJS Kesehatan contributions is more than a technical fiscal decision—it is a defining moment for Indonesia’s national health insurance system. The proposed policy, reportedly awaiting final approval, touches on three fundamental issues: social justice, financial sustainability, and the state’s responsibility in guaranteeing access to healthcare.

At its core, the National Health Insurance (JKN) program was established to ensure that healthcare is not a privilege, but a right. In principle, it embodies the constitutional mandate that every citizen deserves access to medical services. Yet, in practice, millions of participants have fallen into inactive status due to unpaid premiums. For many, arrears accumulated not out of deliberate negligence but because of economic hardship, job loss, informal employment instability, or administrative barriers. When contributions go unpaid, access to healthcare services can be suspended, placing vulnerable families in an even more precarious position.

From a humanitarian perspective, the proposed write-off offers relief to millions of Indonesians. It provides an opportunity for inactive participants—particularly low-income, informal sector workers—to regain access to essential healthcare without the burden of overwhelming debt. In times of rising living costs and economic uncertainty, such a policy signals that the state prioritizes public welfare over rigid financial enforcement. It reframes the government not as a debt collector, but as a social protector.

However, this policy also raises critical concerns about the long-term sustainability of BPJS Kesehatan. The JKN system has historically faced financial pressure due to the imbalance between collected premiums and healthcare claims paid out. The existence of massive arrears reveals deeper structural issues: inconsistent premium compliance, weaknesses in contribution collection mechanisms, and outdated or fragmented participant data. Writing off Rp 26.47 trillion may resolve an administrative backlog, but it does not automatically solve the underlying systemic challenges.

There is also the issue of fairness. Millions of Indonesians have consistently paid their premiums despite economic difficulties. For them, a blanket write-off could appear inequitable, potentially creating a moral hazard where participants perceive that non-payment carries little consequence. If not carefully designed, the policy may unintentionally weaken payment discipline in the future. This is why the government must ensure that any debt relief mechanism is targeted—limited to genuinely vulnerable groups verified through accurate and integrated social welfare data.

The success of this policy ultimately depends on accompanying structural reforms. First, the government should strengthen data integration across ministries and agencies to ensure accurate classification of beneficiaries and contributors. Second, BPJS Kesehatan must modernize its collection and monitoring systems, possibly leveraging digital tools to track contributions in real time and reduce administrative gaps. Third, public education campaigns are needed to reinforce the principle that JKN is built on shared responsibility: solidarity works only when contributions are consistent.

Moreover, policymakers must treat this write-off not as a one-time political gesture, but as part of a broader reform agenda. Sustainable universal health coverage requires predictable funding, improved governance, and transparent accountability. Without these, similar arrears could re-emerge in the future, forcing the state into repeated cycles of financial forgiveness.

Rp 26.47 trillion is a significant figure, but the real issue goes beyond numbers. It reflects the tension between compassion and fiscal prudence, between social protection and institutional discipline. If implemented carefully and paired with systemic improvements, the policy could strengthen public trust in the national health insurance system. If handled poorly, it risks undermining financial stability and fairness.

Ultimately, the government faces a delicate balancing act: ensuring healthcare access for the most vulnerable while preserving the integrity and sustainability of Indonesia’s universal health coverage system.

By : K&Co - February 11, 2026