AmCham Update Vol. 7 #080

Policy Uncertainty after Perry’s Departure, KPK May Question Perry over Bank Indonesia CSR Funds Case, Prabowo’s Approval Rating Down Sharply, Apindo Calls for Deregulation to Help Businesses, Gov’t’s EV Motorcycle Plan Lacks Details

Jul 29, 2026

Policy Uncertainty Rises after Perry’s Rush for the Exit Door

S&P Global Ratings said Indonesia could face greater policy uncertainty following Perry Warjiyo’s sudden resignation as Bank Indonesia (BI) Governor, particularly over the future direction of monetary policy. The agency, however, said on July 28 that the leadership change would not directly affect Indonesia’s BBB/A-2 sovereign rating with a stable outlook.

Perry resigned before the end of his second term, which was scheduled to run until 2028. Senior Deputy Governor Destry Damayanti has been appointed interim governor while the government looks for a permanent replacement. Analysts say the choice of a successor is critical for investor confidence and perceptions of BI’s independence.

In addition, the same day Perry stepped down it was revealed that state asset fund Danantara will play a future role in the Financial System Stability Committee (KSSK), a disclosure that worried some economists.

Finance Minister Purbaya Yudhi Sadewa said on July 28 that Danantara would attend the next KSSK meeting on Aug 3 “only as an invitee,” because the committee “sometimes wants to listen to what business has to say directly.”

Purbaya said the fund will not have voting rights and would leave the room when the KSSK makes any decision involving businesses.

President Prabowo Subianto summoned KSSK members and Danantara CEO Rosan Roeslani to the State Palace on July 27 to say he wanted Danantara involved in the KSSK, which was created to promote financial stability and is comprised of the finance minister, BI governor, Financial Services Authority (OJK) chair and Deposit Insurance Corporation (LPS) chair. It was established in 2008 after the monetary crisis triggered by the failure of Bank Century.

Perry’s departure followed reported disagreements between the Finance Ministry and BI over liquidity, economic growth, and the rupiah. Reuters cited three sources who said the differences intensified in recent months, although they did not say the dispute directly caused the resignation

The tensions included the handling of Rp 200 trillion in state funds that Purbaya moved from BI to state-owned banks to boost lending. The funds were returned to BI in early June to support rupiah stabilization before being re-injected into state banks around two weeks later.

Indonesian financial markets remained under pressure following Perry’s departure. The rupiah is still trading at around Rp 18,000 per US dollar, while the Jakarta Composite Index fell 0.64 percent to close at 6,091.39 on July 28.

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KPK May Question Former BI Governor in CSR Funds Probe

Former Bank Indonesia (BI) Governor Perry Warjiyo could be questioned by the Corruption Eradication Commission (KPK) over the alleged misuse of corporate social responsibility funds at BI and the Financial Services Authority (OJK), days after his resignation from the central bank.

KPK spokesperson Budi Prasetyo said Perry’s departure would not automatically trigger a summons and that investigators would determine whether his testimony was needed.

“It is not the case that someone who has completed their term will automatically be summoned for questioning,” Budi said on July 28.

Budi said the KPK is committed to solving the case and identifying individuals who should be held criminally responsible.

Perry’s name first surfaced when KPK investigators searched BI headquarters, including his office, in December 2024 and seized documents and electronic evidence.

The case concerns the alleged misuse of BI’s Bank Indonesia Social Program (PSBI) and OJK’s Financial Services Counseling (PJK) funds between 2020 and 2023. Investigators allege the funds were diverted by two former House Commission XI lawmakers, Heri Gunawan of the Gerindra Party and Satori of the NasDem Party. Both were named suspects in August 2025.

KPK officials estimate the alleged scheme caused Rp 28.38 billion ($1.57 million) in state losses. Heri allegedly received Rp 15.86 billion ($877,000), including Rp 6.26 billion ($346,000) from BI and Rp 7.64 billion ($423,000) from OJK. Satori allegedly received Rp 12.52 billion ($693,000), including Rp 6.30 billion ($349,000) from BI and Rp 5.14 billion ($284,000) from OJK.

Budi said the KPK would continue tracing the roles of all parties involved and examining the underlying weaknesses that allowed the alleged scheme to occur.

So far, no BI or OJK officials have been named suspects.

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Prabowo Approval Falls to 51.1 Percent in SMRC Survey

President Prabowo Subianto’s approval rating fell to 51.1 percent in July, down sharply from 81.2 percent in November 2025, according to a survey by Saiful Mujani Research and Consulting (SMRC).

Public dissatisfaction rose to 46.9 percent, from 31.7 percent in March and 16 percent in November, as respondents became increasingly pessimistic about the economy, politics, and law enforcement. The survey was conducted July 5 to 19 and involved 749 voting-age respondents.

SMRC Executive Director Deni Irvani said, “The decline in public satisfaction is closely linked to worsening public sentiment toward the economy, politics and law enforcement.”

Nearly half of respondents, or 49.4 percent, rated current economic conditions as “bad” or “very bad,” while only 15.7 percent viewed the economy positively, down from 40 percent in November.

Indonesia normally hands high public-approval ratings to its leaders. Former President Joko Widodo, for example, finished his time in office with approval ratings of about 70 percent and he remains popular with the public.

“The findings confirm economists’ view that the headline economic growth figures do not translate to people’s economic conditions on the ground,” Deni added.

Public confidence in law enforcement also weakened, with 26.4 percent of respondents viewing conditions positively and 37.6 percent negatively. Perceptions of the political environment also deteriorated, with only 13.5 percent giving a positive assessment.

The head of the Government Communications Agency (Bakom), Muhammad Qodari, said public opinion surveys naturally fluctuate and that ups and downs are normal.

“We’ll wait for other studies that can serve as a basis for comparison. Because, in fact, if we look at the economic fundamentals, they’re very strong,” Qodari told reporters during a courtesy visit to a school in Surabaya on July 28.

The findings come amid broader concerns over governance and civic freedoms, including the March acid attack on rights activist Andrie Yunus by active-duty military personnel following his criticism of the military’s expanding role in civilian affairs, and ongoing corruption probes into Subianto’s flagship free nutritious meals program.

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Deregulation Needed to Improve Business Climate: Apindo

One of the country’s most influential business groups, the Indonesian Employers Association (Apindo), has called on the government to pursue a policy of deregulation and removing barriers to doing business, arguing that easing the pressures facing companies is the most effective way to stem the rise of layoffs.

Apindo Chairwoman Shinta Kamdani, speaking to reporters on July 28, said the government should address the causes of business distress rather than acting after workers have already lost their jobs.

"Layoffs are the downstream problem. What we need to understand is what causes layoffs and what challenges businesses are facing," Shinta said.

She said Apindo has a list of issues that need to be addressed through deregulation and simpler policies. The recommendations have been submitted to ministries, government agencies and the House of Representatives.

Shinta said the situation became more urgent as the real economy weakened during the second quarter of 2026. Indonesia's Purchasing Managers' Index (PMI) of manufacturing confidence fell to 46.9 in June, its lowest level since June 2025, while the Industrial Confidence Index (IKI) slipped to 52.9.

The labor market is also weakening. About 126,000 workers suffered from layoffs between January and May 2026, while roughly 50,000 Old-Age Security (JHT) claims were linked to job losses during the same period, according to BPJS Ketenagakerjaan, the national social security agency.

Shinta said Indonesia is not the only country facing rising pressure on businesses. The combination of slower global growth, industrial restructuring, technological disruption and changes in global supply chains are taking a toll everywhere, she said.

"The difference lies in how quickly governments respond with policies that can cushion businesses before those pressures develop into a broader wave of layoffs," she said.

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EV Motorcycle Plan Lacks Details

President Prabowo Subianto’s plan to push a national electric motorcycle brand into the market within weeks is prompting industry observers to ask for details. He first raised the idea in June.

Subianto has said Indonesia will have its own two-wheeler EV brand as part of his broader ambition to build a domestic automotive industry capable of producing vehicles designed and manufactured locally. As part of the plan, the government will redirect long-delayed purchase incentives for electric vehicles to the new initiative.

The new EV motorcycle brand and the company selected to manufacture it will be announced on Aug. 13, according to Danantara’s chief technology officer, Sigit Puji Santosa.

Businesses are seeking greater clarity on the plan and want support for the broader EV industry to remain in place, including purchase incentives and subsidies for converting conventional motorcycles to EV.

Budi Setiyadi, secretary-general of the Indonesian Electric Motorcycle Industry Association (Aismoli), urged the government to involve domestic companies across the supply chain.

“We are basically ready [to give support]. But even now, we still do not have clarity on how the government will drive this program,” Budi told The Jakarta Post last week.

“What remains is [for the government] to decide how much the conversion subsidy and the purchase incentive will be,” Budi said.

The Indonesian Employers Association (Apindo) economy policy analyst Ajib Hamdani said the plan needs to generate local value creation. A motorcycle “should only be considered a national product” if it meets a local content requirement of more than 50 percent, he said.

State Secretary Prasetyo Hadi confirmed the government plan on July 21, and called the project a strategic effort to strengthen domestic production and accelerate the transition of the country’s vehicle ecosystem toward renewables.

Coordinating Economy Minister Airlangga Hartarto said on July 27 that long-delayed EV incentives would be tied to “the development of the national electric motorcycle and car projects,” without explaining further.

About 145 million motorcycles were on Indonesian roads in 2025, according to Statistics Indonesia (BPS), with annual sales of about 6 million units. Only about 229,000 electric motorcycles were in service in 2025, far below the government target of 2 million units.

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Driven by the vision that everyone needs a decent place to live, Habitat for Humanity began in 1976 as a grassroots effort in the United States. Since then, it has grown into a leading global nonprofit working in more than 70 countries. Habitat for Humanity Indonesia has been operating here since 1997 and has supported more than 165,000 families in building or improving a place they can call home. Through financial support, volunteering, or raising awareness about affordable housing, everyone can help families achieve the strength, stability, and self-reliance they need to build better lives for themselves. Through shelter, we empower.

To learn more, donate or volunteer, visit www.habitatindonesia.orgor follow @habitat_id.

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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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