AmCham Update Vol. 7 #079

Purge Begins at BGN, Bank Indonesia Governor Resigns Abruptly, Indonesia Seeks Better US Tariff Terms, Doubts Continue over Febrie Case after Arrest, DG Tax Bans Recording Compliance Interviews, The Long Road to Hydrogen-fueled Vehicles in Indonesia

Jul 27, 2026

Purge Begins at National Nutrition Agency

As expected, the new leadership at the National Nutrition Agency (BGN) has begun a major shake-up, dismissing 261 non-civil servant employees and disciplining 48 civil servants as its new chief, Sudaryono, tightens governance following a high-profile corruption scandal.

Speaking at BGN headquarters in Jakarta on July 27, Sudaryono said the disciplinary action targeted violations of workplace rules, including involvement in online gambling, embezzlement and repeated disciplinary offenses.

"As of today, July 27, we are carrying out a cleanup. Those who violated the rules have been sanctioned," Sudaryono said.

The dismissals by the high-profile agency charged with running the government’s free lunch program, include 224 contract employees and 37 expert staff members.

Sudaryono said nine employees accused of serious misconduct are likely to face dismissal.

"They committed serious disciplinary violations. Most likely they will be processed for termination," he said.

Sanctions range from transfers and demotions to administrative penalties and formal warnings.

"Some were involved in online gambling, some were undisciplined, and others are suspected of stealing money. Don't think that stealing a small amount will go unnoticed. Information spreads quickly now. Someone sends us a WhatsApp message, we investigate, and the person admits it," Sudaryono said.

The purge comes less than a week after President Prabowo Subianto appointed Sudaryono, who is also deputy agriculture minister, to lead the agency following the resignation of Nanik Deyang after just 45 days in office.

Sudaryono is the third head of the National Nutrition Agency since early June when Subianto dismissed then-chief Dadan Hindayana and his two deputies. All three were later named corruption suspects by the Attorney General's Office for procurement irregularities.

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Bank Indonesia Governor Resigns

Bank Indonesia Governor Perry Warjiyo unexpectedly resigned from his position on July 27 after heading the Bank since 2018 and with nearly three years left on his term.

Senior Deputy Governor Destry Damayanti will serve as acting governor while the government searches for a permanent successor.

Perry’s resignation raises market concerns over the central bank’s leadership transition and future independence. Destry said BI would ensure continuity in carrying out its duties to maintain financial-system stability while supporting economic growth.

State Secretary Prasetyo Hadi said on July 27 that President Prabowo Subianto had accepted Perry’s resignation letter, which cited personal reasons. Perry’s second term was set to run until 2028. Perry was appointed in 2018 by then-President Joko Widodo and reappointed in 2023.

“As of yesterday, we officially received the resignation letter from the Governor of Bank Indonesia addressed to the President,” Prasetyo told reporters at the Presidential Palace, adding that Subianto had expressed his appreciation for Perry’s nearly seven years of service.

Analysts said the main concern now centers on Perry’s successor and the future of BI’s institutional independence. “Perry’s resignation will likely be taken negatively by the market, given he has a good track record,” Angus Mackintosh, ASEAN Specialist at Singapore-based Aletheia Capital, told Reuters on July 27.

Mackintosh added that appointing Thomas Djiwandono, Subianto’s nephew and a BI deputy governor, would add to market concerns over central bank independence.

The resignation comes as BI faces pressure to support Subianto’s growth agenda while stabilizing the rupiah, which has performed poorly this year. BI raised its benchmark rate by a total of 100 basis points between May and June to 5.75 percent to try and support the rupiah, which is still trading below 18,000 to the US dollar.

"What must now be anticipated after Perry's resignation is the weakening of Bank Indonesia's independence,” said Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies in Jakarta. ”Restoring investor confidence will certainly not be easy, especially since the direction of monetary policy is under executive control.”

The Jakarta Composite Index closed down on the news, ending the day at 6,185.78, down by 0.17 percent.

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Indonesia Seeks Better US Tariff Terms

Indonesia is seeking lower tariff terms from the United States after the US Trade Representative (USTR) imposed an additional 10 percent duty on Indonesian goods under a Section 301 investigation into forced labor.

The tariff, which took effect on July 24, follows a USTR finding that 60 countries had failed to impose or effectively enforce restrictions on goods produced with forced labor. Indonesia was placed in the lower 10 percent tariff group, alongside India, Malaysia, Mexico, Canada and the United Kingdom, while other countries face a 12.5 percent duty.

The USTR applies the lower 10 percent tariff to countries that ban imports of goods made with forced labor, have committed to such measures under an Agreement on Reciprocal Trade (ART), or maintain an effective regime to prevent the import of goods made with forced-labor.

Coordinating Ministry for Economic Affairs spokesperson Haryo Limanseto said Indonesia would keep talking to the USTR about securing more competitive treatment.

The new measure is separate from the 19 percent tariff agreed under the US-Indonesia Agreement on Reciprocal Trade (ART). The Section 301 duty does not replace the ART rate and may apply in addition to other applicable tariffs, unless specific products are exempted or covered by a separate mechanism.

Meanwhile, Haryo noted that the government is closely monitoring the USTR's decision to grant product-specific tariff exemptions for certain Indonesian exports, adding that several Indonesian products are included on the list of tariff-exempt products.

The USTR finalized the new duties on July 23. The agency is also conducting a separate Section 301 investigation into alleged excess manufacturing capacity and production, which includes Indonesia among the countries under review.

The additional duty adds further uncertainty to Indonesia’s trade outlook after the US Supreme Court ruled President Donald Trump’s “Liberation Day” tariffs unconstitutional on Feb 20, one day after Indonesia and the US signed the ART. Indonesian officials have said the agreement will still be honored, though implementation has faced delays due to US legal developments.

Business groups warned that prolonged uncertainty could affect export-oriented industries, particularly textiles, garments and footwear, which rely heavily on the US market.

“For businesses, the uncertainty is not just about the tariff level, but also policy predictability and certainty over implementation,” said Indonesian Employers Association (APINDO) Chairwoman Shinta Kamdani.

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Doubt Continue over Fairness of Febrie Probe

Despite the arrest by the Attorney General’s Office’s (AGO) of former top corruption prosecutor Febrie Adriansyah on July 24, doubts continue over the treatment he is being given.

The AGO arrested the one-time assistant attorney general for special crimes after questioning him at AGO headquarters over alleged money laundering in the past handling of a graft case involving state-owned insurer PT Asabri.

Febrie was subsequently transferred to the Corruption Eradication Commission’s (KPK) detention facility near midnight. The AGO said he would be detained for at least the next 20 days.

Even with his arrest, concerns remain over whether the AGO can investigate its own. When Febrie left the AGO offices, he was not wearing a detainee vest nor was he handcuffed.

“Every suspect should be treated the same. The detainee vest should be worn by everyone, including [a former AGO prosecutor] like Febrie,” criminal law expert Abdul Fickar Hadjar of Trisakti University told The Jakarta Post on July 26.

AGO assistant attorney general for supervision Rudi Margono dismissed the concerns, saying the lack of a vest and cuffs was caused by the late hour.

The decision to hold Febrie at the KPK detention center also raised questions.

Constitutional law expert Yance Arizona of Gadjah Mada University said the situation has “never happened before,” and he questioned the motive behind it.

“If the AGO feels it is unable to handle this case, it should just hand it over to the KPK to ensure there is no ambiguity over which institution is responsible for the probe,” Yance told the Post.

Febrie’s name first appeared after police investigators raided multiple locations earlier this month, including Febrie’s house in Sentul, where they seized billions of rupiah-worth of banknotes in various currencies and 74 kilograms of gold bars.

Febrie resigned on July 11, denying any wrongdoing. Later that day, the police named him a suspect and handed the case to the AGO, prompting concerns among civil society groups over the prosecution being handled fairly.

Meanwhile,Police are investigating the death of a man reportedly serving as a personal aide to Febrie.

The man, identified as Sutrimo, was found unconscious outside a clinic in South Jakarta on Thursday and was taken to a nearby hospital, where he was pronounced dead, Jakarta Police spokesman Budhi Hermanto said on Sunday.

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DG Tax Bars Recordings of Virtual Compliance Interviews

Indonesia’s Directorate General of Taxes (DGT) has issued new guidelines barring taxpayers from recording or distributing virtual compliance interviews under the Letter of Request for Explanation of Data and/or Information (SP2DK) process, raising concerns among tax practitioners over transparency and procedural fairness.

Director General of Taxes Circular Letter No. SE-8/PJ/2026 on Taxpayer Compliance Monitoring, prohibits taxpayers, their representatives, proxies, and employees from recording, storing, or disseminating audio, video, photographs, or other documentation from online tax sessions. Tax officials, however, are required to record the proceedings and inform participants of the restriction before the interview begins. Virtual sessions may be terminated if taxpayers refuse to comply.

Tax experts said the rule could deepen the imbalance between taxpayers and the tax authority. Prianto Budi Saptono, the executive director of the Pratama-Kreston Tax Research Institute, said the restriction “has the potential to trigger serious debate regarding equality of position,” noting that the tax authority retains the right to record proceedings while taxpayers do not.

Other practitioners said allowing both sides to retain recordings would better support transparency and procedural fairness, particularly in cases that later develop into disputes.

The new guidance comes as the government is trying to increase tax collections while pursuing an ambitious 2026 tax revenue target of Rp 2,357.7 trillion ($131.5 billion).

The circular follows another recent directive that drew public criticism after it referred to the possible involvement of the Armed Forces and the National Police in supporting taxpayer compliance efforts.

Responding to those concerns on July 21, Director General of Taxes Bimo Wijayanto said the circular merely updated operational guidelines that have been in place since 2020.

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The Long Road to Hydrogen-Fueled Vehicles

Indonesia launched a national hydrogen transport initiative on July 21, with a 194-kilometer green energy corridor linking Jakarta and Patimban and introducing a hydrogen-diesel dual-fuel bus as part of building a domestic hydrogen ecosystem to accelerate the clean energy transition.

The initiatives were introduced at the Global Hydrogen Ecosystem Summit (GHES) in Jakarta, but cost and availability remain works in progress.

Energy Minister Bahlil Lahadalia has said that hydrogen vehicles could compete with battery electric vehicles (EVs) within five to 10 years, pointing to the government's 100-gigawatt solar power plant program as a key to producing green hydrogen via electrolysis.

The energy ministry has launched 93 hydrogen development projects, and Eniya Listiani Dewi, the ministry’s director general for renewables, estimates they could attract up to Rp 32 trillion ($1.78 billion) in investment.

PLN says it has partnered with Pertamina to distribute hydrogen for transportation and also hopes to convince Jakarta to integrate hydrogen buses into the city’s Transjakarta fleet.

State-owned bus operator Perum DAMRI has started testing hydrogen-diesel dual fuel (HDDF) buses, which inject hydrogen into a conventional diesel engine to reduce fossil fuel consumption.

Alloysius Joko Purwanto, an energy economist at the Economic Research Institute for ASEAN and East Asia (ERIA), has noted three fundamental challenges to overcome if hydrogen vehicles are to move beyond the pilot stage.

“First, the hydrogen supply chain, from production centers to filling stations, is currently only at the trial stage,” Joko told The Jakarta Post on July 23, referring to small-scale facilities in Jakarta developed by the energy ministry and PLN.

The more immediate obstacle is price, according to Joko. His calculations show that green hydrogen would be roughly twice as expensive as a conventional engine. A Toyota Mirai using a hydrogen fuel cell, for example, would cost around Rp 1,700/km, Joko said. A BYD Atto EV costs a mere Rp 225/km when charged using household electricity, rising to just Rp 346/km for public charging stations.

"The most important requirement is the massive development of renewable energy power generation at an affordable price," Joko said, arguing that the economics simply would not work without low-cost green power to produce cheap green hydrogen.

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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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