AmCham Update Vol. 6 #45

Gibran under Pressure as Controversy Sharpens, Layoffs in Media Spark Concern, Business Concerns over Gov’t Termination Task Force, Manufacturing Contracted in April, Inflation for April 1.17%

May 05, 2025

Call for Gibran’s Ouster Hints at Wider Tensions

A recent call by a group of retired military officers for the removal from office of Vice President Gibran Rakabuming Raka, the son of former President Joko Widodo, has brought to the forefront simmering tensions over his presence in the government after a controversial court decision led to his nomination last year.

A letter began circulating widely last week and was signed by numerous former officers including retired general and former vice president Try Sutrisno. It said Gibran was in office unconstitutionally and highlighted what appears to be growing discontent, with critics calling him a product of dynastic privilege and doubting his legitimacy.

A video monologue Gibran posted on YouTube was apparently intended to help his image with younger voters as he praised young people for being part of the Golden Indonesia vision, in which the country aims to become an advanced and prosperous nation by 2045.

Instead, the short video was widely mocked as superficial and inauthentic.

Analyst Yoes Kenawas from Atma Jaya University said the negative sentiment reflects mounting disapproval, particularly from the middle class, of Gibran following his controversial election nomination.

“There seems to be persistent perception that he didn’t earn his position through competence or experience, but rather that it was handed to him through backroom deals and legal manipulation,” Yoes said.

More unease surfaced this week as Indonesian Military (TNI) chief Gen. Agus Subiyanto, issued an order to reassign more than 200 senior officers, including Lt. Gen. Kunto Arief Wibowo, Try Sutrisno’s son.

A day later, however, Agus took the rare step of abruptly cancelling Kunto’s reassignment from his position as the commander of First Joint Defense Regional Command (Kogabwilhan I), which covers the land, water and air areas from Sumatra to Kalimantan.

The move and the unusual reversal led to widespread speculation that the military is experiencing internal tensions.

Gibran rose to the vice presidency after a brief stint as mayor of Solo, the job that launched his father’s political career. He became eligible to run in last year’s election only after the Constitutional Court, then led by chief justice Anwar Usman who is Jokowi’s brother-in-law, created an exception to the minimum age requirement of 40 years for presidential and vice presidential candidates.

Gibran appears to be struggling to play a meaningful role in President Prabowo Subianto’s government, as seen in his lack of substantial duties beyond ceremonial appearances, exclusion from strategic meetings and minimal engagement in policy decisions.

“He was included on the election ticket primarily to secure Jokowi’s backing and ensure support from his loyal voter base. But now that the election is over, there’s little incentive to give Gibran a meaningful role,” said Yoes.

State Secretary Prasetyo Hadi, who now doubles as presidential spokesperson, did not comment on the issue and so far Subianto has been quiet on the turmoil surrounding his No. 2.

Special Presidential Advisor on Political and Security Affairs Wiranto, has said that he respected the views of his fellow veterans, but stressed that there are constitutional boundaries that need to be upheld.

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Indonesian Media in Crisis over Layoffs

An ongoing wave of layoffs at media outlets nationwide has prompted the Indonesian Press Council to back a fledgling call by the communications ministry to establish a public endowment fund to promote independent and sustainable journalism.

"This fund is not just for the journalists, but also for the long-term sustainability of the media industry," Press Council Chairwoman Ninik Rahayu said after attending a national seminar on media sustainability in Jakarta on Saturday, World Press Freedom Day.

Though still under discussion, the proposed fund would support journalistic activities over the long term.

“It could come from government funds, CSR contributions, or pooled community support to help struggling media organizations,” Ninik said.

According to the Press Council, approximately 1,200 media workers, including journalists, were laid off between 2023 and 2024. Recent unverified reports from whistleblowers suggest that hundreds more may face layoffs this year.

The emotional toll of the layoffs was captured in a video clip from Kompas TV showing TV presenter Githa Maharkesri, of “Kompas Sport Pagi,” breaking down in tears during the final broadcast of the show she hosted for nearly 12 years after it was officially discontinued.

Githa’s emotional farewell quickly went viral on social media.

The seismic shift in the media landscape caused by digital platforms and social media has eroded advertising revenues. As much as 75 percent of Indonesia’s national ad spending is now absorbed by these platforms, according to the Jakarta Globe – a website that was itself once a splashy daily newspaper.

Also speaking at the event, Deputy Minister of Communication and Digital Affairs Nezar Patria acknowledged the ongoing crisis.

"We need to work together to design a model that aligns with the mandate of the current Press Law," said the former Chief Editor of the Jakarta Post.

Nezar said that the sustainability of the press should not be the government's sole responsibility, as maintaining editorial independence remains critical.

“The government, especially the communications ministry, does not regulate how the press should operate. The media is governed independently under the Press Council,” he said. “This is essential to ensure a healthy relationship between the press, the government, and other public institutions.”

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Controversy over Gov’t’s Termination Task Force

The government’s plan to form a Layoff Mitigation Task Force (Satgas PHK) has drawn mixed reactions, with business leaders, experts, and legislators questioning the purpose behind its establishment and expressing concern that it could evolve into a mechanism for punishing employers.

Danang Girindrawardana, Executive Director of the Indonesian Textile Association (API), expressed concern over the formation of the Satgas PHK, emphasizing that it must remain focused on its original goal of preventing mass layoffs, rather than becoming a mechanism for auditing and criminalizing employers.

"It’s a worrying idea for any labor-intensive industry player," Danang said on May 1, adding, "If it turns into a tool for criminalizing employers, it will scare businesses away from operating or expanding."

He further stressed the importance of reviewing existing regulations, particularly those developed through a tripartite approach that includes workers, the government, and employers.

Further criticism also came from Payaman Simanjuntak, a labor expert from the University of Indonesia (UI), who argued that the creation of the task force won’t fix the root causes behind the recent wave of job terminations.

“Workers demand that the President form a layoff task force? What will be its role? Can it increase worker productivity to help companies survive without laying off employees?” said Payaman in an interview on May 3.

Payaman said the layoffs are largely a consequence of the slow-moving economy, which has forced companies with low productivity and competitiveness to reduce their workforce.

In a related development, Irma Suryani Chaniago, a member of the House of Representatives’ Commission IX, cautioned that the Satgas PHK must not duplicate the Ministry of Manpower’s functions. "Satgas PHK must not take over the Ministry of Manpower's responsibilities. There must be coordination with the Ministry," said Irma on May 2.

From the government’s end, Minister of Manpower Yassierli said the task force is expected to be finalized by the end of this month, noting that the team is in the final stages of preparation. "We are in the finalization stage, it takes time to formulate the task force roles and duties," said Yassierli on May 2.

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Indonesia’s Manufacturing Sector Contracted in April

Indonesia’s manufacturing activity has slumped to its lowest level since the Covid-19 pandemic, as mounting global economic pressures continue to challenge the country’s industrial sector. Indonesia’s manufacturing Purchasing Managers’ Index (PMI) plunged to 46.7 in April 2025 from 52.4 the previous month, according to a report published by US-based financial analytics firm S&P Global on May 2.

A PMI score below 50 indicates an overall decrease in manufacturing activity.

Government officials attributed the downturn to global economic conditions. “Businesses are pressured by the global trade war and influx of imported goods into the domestic market,” said Febri Hendri Antoni Arief, spokesperson of the Ministry of Industry, in a written statement on May 2.

Firms have responded to global economic instability by taking more prudent decisions. “Firms are engaged in retrenchment practices by scaling back purchasing and employment levels while also winding down stocks of inputs and finished items,” according to Usamah Bhatti, an economist at S&P Global Market Intelligence. He estimates that the short-term performance of the Indonesian manufacturing sector remains subdued.

Shinta Kamdani, Chairwoman of the Indonesian Employers Association (Apindo), shared the same forecast. She expected that Indonesia’s manufacturing sector will remain sluggish until the end of the second quarter, and called on the government to take further action.

In response, Coordinating Minister for Economic Affairs Airlangga Hartarto has announced plans to reinvigorate the manufacturing sector. “A deregulation policy package is being processed and will be released soon,” said Airlangga at his office on May 2.

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April Inflation at 1.17 Percent

Statistics Indonesia (BPS) reported that Indonesia’s monthly inflation rate reached 1.17 percent in April 2025, slightly lower than the 1.65 percent recorded in March. BPS noted that surging electricity tariffs and gold prices were the main drivers behind the inflation increase.

“The April inflation rate stood at 1.17 percent,” said Pudji Ismartini, Deputy for Distribution and Services at BPS, during a press conference on May 2.

Pudji cited housing, electricity, and household fuels as the largest contributors to monthly inflation, adding 0.98 percentage points. Electricity tariffs shot up by 26.99 percent, following the government's decision to end its 50 percent discount on post-paid bills on Feb 28.

“Electricity tariffs alone contributed 0.97 percent to overall monthly inflation, with an average increase of 26.99 percent,” Pudji said.

Gold jewelry emerged as the second-largest contributor, accounting for 0.16 percentage points of monthly inflation. Prices jumped 10.52 percent month-to-month, driven by continued global price hikes.

“This is the highest monthly inflation for gold jewelry in the past 20 months,” she noted.

The food, beverages, and tobacco category also contributed 0.64 percentage points to overall inflation, with powdered coffee, cooking oil, and cayenne pepper among the top drivers.

On an annual basis, BPS recorded inflation at 1.95 percent year-on-year in April, up from 1.03 percent in the same month last year. Calendar year-to-date inflation stood at 1.56 percent.

Hosianna Evalita Situmorang, an economist at Bank Danamon, highlighted that core inflation rose 2.5 percent year-on-year, indicating moderate underlying price pressures. She attributed this to strong domestic rice production and low global oil prices. However, she cautioned that economic momentum is beginning to slow.

“Indonesia’s manufacturing purchasing managers’ index fell to 46.7 in April – the first contraction in six months and the lowest since August 2021,” she said, citing declining output, weaker demand, and rising import costs.

Despite a record-high 3.18 million tons stockpile of rice, Minister of Agriculture Amran Sulaiman cautioned that extreme weather conditions still posed significant risks to Indonesia's food security, despite President Prabowo Subianto greenlighting exports to other countries.

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Member Announcement: Center for Indonesian Policy Studies (CIPS)

DigiWeek 2025 – CIPS’ Flagship Digital Policy Forum

The Center for Indonesian Policy Studies (CIPS) invites AmCham members to join DigiWeek 2025, an annual forum bringing together leaders from government, business, and civil society to build a trusted and inclusive digital ecosystem.

Now in its sixth year, DigiWeek will highlight key issues, including building consumer trust in digital finance, promoting online user safety and rights, and fostering shared responsibility in driving Indonesia’s digital economy forward.

We’d love to have you involved – as a participant, supporter, or sponsor – to help shape the future of Indonesia’s digital landscape.

More info: https://www.cips-indonesia.org/digiweek2025

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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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