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