AmCham Update Vol. 7 #077

Indonesia Financial Center Law Passes in Double Time, Another BGN Head Quits, Village Cooperatives Jumbo Fan Procurement under the Microscope, Biometric SIM Registration Hits 9.3 Million, Why did Prabowo and Gibran not sit Together at Cabinet Meeting?

Jul 22, 2026

Financial Center Law Passes in Double Time

The bill creating the Indonesia International Financial Center (PFII) has been rushed through the House of Representatives just weeks after the idea was announced.

The rapid passage is apparently due to the government wanting to break ground by the end of the year and President Prabowo Subianto planning to talk about PFII in his state of the nation address scheduled for Aug 14 to coincide with Independence Day on Aug 17.

Speaking in the DPR on July 21, Finance Minister Purbaya Yudhi Sadewa said the law is designed to broaden funding options and allow businesses and the government to raise capital through a wider range of financial instruments.

The bill was under consideration for less than three weeks, starting July 2 in DPR Commission XI, which oversees financial affairs.

There was little public consultation, experts say, and much of the deliberation took place in private. Purbaya had said the bill needed to pass before the DPR went into recess on July 22. I

The PFII bill itself was based on the Financial Sector Development and Strengthening (P2SK) Law, which was amended less than two months ago.

Commission XI deputy head, Mohamad Hekal, told reporters fast passage was necessary. “Our thinking is that, if we don’t rush it, [the opportunities] will be seized by other countries, because some other countries have just established new financial centers,” he said.

He said Bali is the main option for the center’s initial location.

“The process appears rushed in procedural terms,” Economist Intelligence Unit (EIU) Asia analyst Tay Qi Hang told The Jakarta Post on July 21. “Speed can be valuable, but in Indonesia’s current institutional context, rapid passage with limited transparency risks reinforcing concerns about regulatory unpredictability and weak governance, which could undermine the investor confidence the law intends to attract.”

No draft was released ahead of passage and few confirmed details are publicly available. Tay said the lack of transparency was “concerning” and may also hurt investor confidence.

Permata Bank chief economist Josua Pardede said on July 21 that caution was more important than ever, given the recent spotlight on transparency, and what the government and legislature had done in the drafting process “was not sufficient” to convince the market.

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BGN Chief Resigns, Budget Cuts Announced

The leader of the National Nutrition Agency (BGN) resigned on July 22 from the body that directs the government’s troubled Free Nutrition Meals program, citing health concerns.

Nanik Sudaryati Deyang made the announcement on Facebook after serving just six weeks in the position. It is the second change in leadership at BGN in two months. Her predecessor was fired by President Prabowo Subianto and then arrested in connection with corruption charges related to the free lunch program.

In her post, Nanik said she would seek medical treatment abroad for a heart condition. “I bid farewell to Mr. President to undergo treatment abroad for my heart, and I plan to depart today," she said in the post. She said Subianto had approved her decision to step down.

It was later announced that she would be replaced immediately by Deputy Agriculture Minister Sudaryono, who will resign from his current position.

Nanik’s abrupt departure is just the latest blow to the free lunch program, which was rapidly put in place in 2025 and has suffered from thousands of cases of food poisoning, concerns over its impact on the country’s fiscal position and a growing scandal related to procurement.

A day earlier, BGN announced that its budget for 2026 had been cut for a second time from Rp 268 trillion to Rp 229 trillion ($12.79 billion). The budget is now more than Rp 100 trillion lower than the initial allocation of Rp 335 trillion.

Its goal of feeding 83 million children and pregnant women in 2026 seems like a mirage. Before the latest cuts, it had delivered free meals to 62.5 million people, the agency said. More budget cuts are possible pending a further review.

"There will be reduction in the number of beneficiaries,” said BGN Deputy Head Agustina Arumsari. “The president no longer targets a certain number, but he wants improvement in quality so that there is no more food poisoning."

In her resignation post, Nanik said the president will establish an oversight board for BGN and she has been asked to chair it. She said she would do so as long as the position did not involve handling money.

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Agrinas Procurement of Fans for Village Cooperatives Faces Criticism

The state-owned enterprise charged with building the government’s network of village cooperatives, Agrinas Pangan Nusantara, is under fire from lawmakers and analysts over the reported Rp 1.8 trillion ($100 million) procurement of industrial fans for the program, prompting calls for greater transparency over pricing, procurement and supplier selection.

Procurement documents published on Agrinas own Instagram account (and seemingly later deleted) show that each of the planned 80,000 cooperatives would receive one industrial "jumbo" fan and two exhaust fans. The documents list a reference price of around Rp 40.8 million per cooperative, while the winning bidder offered a price of approximately Rp 32 million, 21 percent lower.

The documents state that supplying all 80,000 cooperatives would amount to roughly Rp 2.56 trillion, higher than the reported Rp 1.8 trillion procurement value, raising questions about the scope of the purchase.

The flap over fans echoes similar worries over procurement for the Free Nutritious Meals program that later spread into a scandal that has damaged the program.

During a House of Representatives (DPR) Commission VI working meeting with Cooperatives Minister Ferry Juliantono on July 15, lawmaker Mufti Anam questioned both the reported procurement value and the limited public information surrounding the project.

"Today, the public is stirred with reports of the procurement of 1.8 million fans worth Rp 1.8 trillion. We tried to find information, but could not obtain any information," Mufti said.

Ferry urged lawmakers to check with the Red and White Village Cooperative Information System (Simkopdes) for further information, as his ministry is not handling the issue.

Agrinas President Director Joao Angelo De Sousa Mota on July 16 said allegations of misappropriation were "provocative and unfounded."

"It is concerning that one of our lawmakers made public statements without first obtaining prudent and reliable data," Joao said.

Civil society groups also questioned the procurement. Indonesia Corruption Watch researcher Wana Alamsyah said the purchases appeared to have been made without an adequate assessment of village needs and questioned why procurement for cooperative equipment was centralized under Agrinas.

Meanwhile, Center of Economic and Law Studies (Celios) Economics Director Nailul Huda said the centralized procurement model lacked sufficient safeguards and transparency.

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Biometric SIM Registration Reaches 9.3 Million

Indonesia’s biometric SIM card registration program has recorded 9.3 million registrations since its rollout in January, but the Ministry of Communications and Digital Affairs (Komdigi) has identified loopholes that could undermine efforts to curb identity fraud and misuse of mobile phone numbers.

Komdigi found that some SIM card sellers in Yogyakarta had reportedly activated cards using their own facial biometrics before selling them and later unregistering the numbers. The practice allows cards to circulate without being properly linked to their actual users.

Despite the concerns, registrations have accelerated in recent months. Komdigi Director General of Digital Ecosystem Edwin Hidayat Abdullah said monthly registrations rose from around 760,000 in May to 2.1 million in June, reaching 4.6 million as of July 19. Komdigi is targeting 18 million registrations by the end of 2026.

Komdigi plans to sustain the rollout through public education campaigns and cooperation with mobile operators while preventing the unauthorized use of national identity (NIK) and family card (KK) numbers.

“We hope biometric registration will reduce the number of active phone numbers using identities without authorization, providing a more accurate picture of how many numbers are genuinely used for telecommunications purposes in Indonesia,” Edwin said on July 21.

Minister of Communications and Digital Affairs Meutya Hafid said on July 14 that biometric registration is intended to strengthen digital identity security, curb crimes including online gambling and fraud, and ensure mobile numbers are linked to their rightful owners as they became increasingly important for accessing digital services.

ICT Institute Executive Director Heru Sutadi told The Jakarta Post on July 21 that slower subscriber growth during the early stages of implementation was expected because of the stricter registration process.

“Biometric registration is a step forward. However, this system must be accompanied by robust oversight, compliance by all industry players, and consistent law enforcement so that the goal of creating a safer telecommunications ecosystem can truly be achieved,” said Heru.

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Why did Gibran Not Sit Next to Prabowo at Cabinet Meeting?

It’s not just who you are but where you sit and the seating arrangement at the latest Indonesian cabinet meeting caused tongues to wag because Vice President Gibran Rakabuming Raka was seated separately from President Prabowo Subianto.

During the meeting at the State Palace on July 20, Gibran was seated on the front right side of the room alongside several senior ministers, rather than next to Prabowo.

The arrangement differed from the previous full cabinet meeting on March 13, when Gibran sat next to Subianto at the same table.

Does it mean anything? State Secretary Pratikno said it was a meaningless change and done for technical reasons.

But given that Gibran is the son of former President Joko Widodo, even the cabinet meeting seating chart is looked at for signs of tension.

"There are no other matters to be concerned about," Pratikno told reporters on July 21.

According to Pratikno, Subianto presented materials that required teleprompters and display screens, prompting adjustments to the room layout.

Pratikno said the administration remains united and focused.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Donna Priadi and written by the AmCham Staff.

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