INDONESIA FACES UNREST AND POLITICAL TURMOIL AS CONFIDENCE IN GOVERNMENT FALTERS

By KUSNANDAR & CO., Attorneys at Law – Jakarta, INDONESIA

 

Indonesia is once again in the global spotlight as mass protests, deadly clashes, and the dismissal of senior ministers shake investor confidence in Southeast Asia’s largest economy. What began as outrage over lawmakers’ housing allowances has erupted into nationwide unrest, with Parliament now weighing a no-confidence motion against the government.

 

The political crisis has already taken a heavy toll. Riots in Jakarta and other cities left at least ten people dead, hundreds injured, and thousands detained. Public property was destroyed, police stations torched, and even the home of former Finance Minister Sri Mulyani Indrawati—dismissed in a dramatic cabinet reshuffle—was ransacked. For many Indonesians, the unrest is less about stipends and more about long-standing frustrations over inequality, corruption, and governance.

 

Markets reacted swiftly to the turmoil. The rupiah weakened, stocks slid, and foreign investors openly questioned whether the government could maintain policy stability. The sudden sacking of Sri Mulyani—widely regarded as a stabilizing figure in international finance—has only deepened uncertainty.

 

Yet, amidst the turmoil, Indonesia’s institutions continue to function. Parliament has pledged to fast-track an “unexplained wealth” bill aimed at seizing assets from officials whose fortunes cannot be justified. Legal scholars note that while Indonesia’s Constitution does not explicitly provide for no-confidence votes, the DPR has authority to initiate proceedings that, if supported by evidence, can trigger constitutional review and even impeachment inquiries. In other words, the democratic system is being tested but remains active.

 

For businesses and investors, however, the challenge lies in navigating the uncertainty. Political risk, regulatory gaps, and sudden shifts in governance are realities of the Indonesian market. This is where Kusnandar & Co. adds value. With deep experience in corporate, regulatory, and dispute resolution matters, the firm advises international investors on how to mitigate legal risks, structure operations, and maintain compliance even in turbulent times.

 

“We understand that Indonesia offers enormous opportunities, but those opportunities come with complexity,” said a senior partner at Kusnandar & Co. “Our role is to help businesses see beyond the headlines—by guiding them through licensing, manpower, investment structuring, and, when necessary, dispute management. Stability may fluctuate, but a strong legal strategy keeps companies protected.”

 

The unrest has underscored how quickly Indonesia’s operating environment can shift. For investors already in the country, the immediate focus is risk management and ensuring contractual protections are in place. For those considering entry, the emphasis should be on structuring investments in ways that allow flexibility, security, and compliance under Indonesian law.

 

Ultimately, while the unrest has revealed deep frustrations within society, it has also forced Parliament to accelerate long-needed reforms. If these reforms are real and sustained, Indonesia could emerge stronger and more transparent. In the meantime, however, businesses will need steady legal guidance to avoid pitfalls and seize opportunities responsibly.

 

At Kusnandar & Co., we believe this moment, though fraught, can serve as a turning point for Indonesia. With the right legal strategies, foreign and domestic investors alike can continue to thrive—even in an environment where politics and policy are evolving by the day.

K&Co - September 11, 2025