AmCham Update Vol. 7 #085

Destry is Prabowo’s Sole Choice for Bank Indonesia Governor, Education Law Changes could bypass MK Ruling on MBG Funding, Indonesia’s Research Agency Eager to Develop Nuclear Power, Gov’t Expands Tax and Wage Incentives to Curb Layoffs, Danantara’s400 percent Revenue Growth Claim Unverified

Aug 10, 2026

Prabowo Nominates Destry to Head Bank Indonesia

President Prabowo Subianto has nominated Bank Indonesia acting governor Destry Damayanti as the only candidate to take the reins as the next central bank governor, State Secretary Prasetyo Hadi said on Aug 10.

The nod seems to be a vote for continuity in the governor’s chair following the sudden resignation last month of Bank %u2060Indonesia Governor Perry Warjiyo for personal reasons. Investors have been closely watching the process and Destry, a veteran banker with a master’s degree from Cornell University in New York, was the clear front runner

Destry has served as senior deputy governor since 2019 and was BI’s second ranking official when Perry resigned. She worked in commercial banking with Bank Mandiri for several years before taking government posts.

The president can submit up to three names to the House of Representatives (DPR) for approval but in recent years, only one name has been moved forward for the job. Her approval is virtually assured given the scope of Subianto’s ruling coalition.

One key issue she will face is managing Indonesia’s battered currency. The rupiah has strengthened on speculation she would be the next governor from near 18,000 to the US dollar to 17,747 on Aug 10.

Most analysts believe investors favor Destry due to her years of experience in the central bank, the government, commercial banking and deposit insurance.

“Those experiences mean Destry understands market behavior, capital flow, banking, bonds, money market and foreign exchange as well as [how to] shape investor expectations,” Permata Bank chief economist Josua Pardede told The Jakarta Post on Aug 7.

Josua said her main tasks include keeping inflation in check, maintaining rupiah stability, making data-driven interest rate decisions and using policy tools to push growth.

Then there is political pressure, which some fear Destry is less prepared to withstand than was her predecessor.

Josua said Destry has spent years facing government officials and navigating the political landscape would not be a problem for her.

“For me, the largest risk is not whether Destry as a person is masterful enough to deal with the government. It’s whether or not from the start she’s able to draw a line in the sand that separates coordination from subordination,” Josua said.

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Education Law Changes could bypass MK Ruling on MBG Funding

Experts have hit back at the idea that changes in the Education Law could be a way for President Prabowo Subianto’s Free Nutritious Meals (MBG) program to bypass a Constitutional Court (MK) ruling that said the program cannot be funded through the education budget.

The Court ruled on July 30 that MBG is not a core component of education and therefore should not count toward the constitutional requirement that at least 20 percent of the State Budget (APBN) be allocated to education. The ruling clouds the funding future for the expensive program. The government must separate MBG funding from the education budget by 2028, although the Court encouraged adjustments to begin in 2027.

The decision could have significant implications for next year’s budget. House of Representatives (DPR) Commission IX Deputy Chairman Charles Honoris said the indicative 2027 MBG allocation stood at around Rp 268 trillion ($15 billion). If education funds can no longer be used, he estimated that only around Rp 40 trillion to Rp 50 trillion would remain available for MBG outside of education spending.

Charles also called for a review of MBG spending to improve efficiency and prevent waste.

Separately, debate has emerged over whether the ongoing revision of the National Education System Law could affect how MBG is classified in future budgets. Indonesian Teachers Association representative Satriwan Salim warned that changes to the law could reopen questions over whether the program could be linked to education spending.

“This means that the free meals program, as a manifestation of national health policy, could eventually become a core component of education,” Satriwan said on Aug 7, while calling for broader public consultation.

Constitutional law expert Feri Amsari said any legislative changes would still have to comply with the MK ruling, which is final and binding. He argued that MBG could not simply be returned to the education budget through changes in legal definitions or budget classifications.

The MBG Watch civil society coalition also urged lawmakers not to circumvent the ruling through changes in budget nomenclature or regulations.

“Any attempt to maintain education funding for the free meals program through changes in budget nomenclature, budget engineering or regulatory adjustments would amount to a denial of the ruling,” Transparency International Indonesia representative Agus Sarwono said on Aug 8.

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Indonesia Research Agency Tells Prabowo it is ready for Nuclear Development

In a meeting between President Prabowo Subianto and about 150 researchers from the National Research and Innovation Agency (BRIN) on Aug 6, the scientists said they are ready to get to work building the technology the nation needs to move toward nuclear power.

BRIN head Arif Satria said the agency is currently working on numerous strategic technologies and nuclear will be the next hurdle.

“BRIN must prepare nuclear technology capabilities from now on, so that when Indonesia decides to enter the PLTN [nuclear power plant] era, we do not start entirely from zero and do not merely become technology buyers,” Arif said in a press release on Aug 6.

The country has potential reserves of 89,000 metric tons of uranium and 143,000 metric tons of thorium, crucial elements for nuclear power, according to BRIN figures.

Arif said BRIN would focus on building a comprehensive, national nuclear program understanding the entire technology chain, from uranium and thorium extraction to fuel fabrication, reactor technology, and safety.

State Secretary Prasetyo Hadi told reporters on Aug 7 that nuclear development was intended to support energy generation and also other sectors such as “heath care.”

Other innovations presented to the president included low-pressure natural gas storage technology for LPG and innovative energy-saving electric fishing boats for the free nutritious meal program.

BRIN also aims to integrate artificial intelligence technology into the free lunch program with devices to monitor food containers for quality during distribution.

After the meeting with the president, Arif said BRIN had been previously tasked with improving its weather modification program in anticipation of a more severe El Niño phenomenon this year.

“This year’s El Niño is expected to last for relatively the same duration, but it’s hotter and drier,” Arif said.

Arif added that Subianto was also enthusiastic about BRIN’s salt water desalination program for coastal areas and its technology for processing floodwater, wastewater and brackish water into safe drinking water.

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Gov’t Expands Tax and Wage Incentives to Curb Rising Layoffs

Coordinating Minister for Economic Affairs Airlangga Hartarto has said officials are offering tax breaks and subsidized internship wages to help companies avoid layoffs. One of the measures uses government-borne Income Tax Article 21 (PPh 21) for eligible workers with gross monthly incomes of up to Rp 10 million in designated sectors.

The use of PPh 21 is under Minister of Finance Regulation 105/2025 and targets labor-intensive areas like footwear, textiles and apparel, furniture, and leather and leather goods.

“The government has the National Internship Program, which provides additional labor incentives for companies. New workers entering the workforce will also have their salaries covered by the government,” Airlangga told reporters on Aug 6.

The internship program offers additional labor support while easing costs of employment for companies. The government covers the allowances of internship participants for six months.

Airlangga said Indonesia’s labor market remains relatively resilient, despite the continued rise in layoffs. He noted that the number of people starting new jobs remains higher than the number of layoffs, while the government is monitoring industries that are considered vulnerable to further job losses.

Indonesia’s official unemployment rate is at 4.65 percent, down by 0.03 percent from February, according to a Statistics Indonesia (BPS) report issued Aug 5. Underemployment and people who have stopped looking for work are not included in the data.

Experts say the employment data released by different government agencies is also inconsistent. Institute for Development of Economics and Finance (INDEF) researcher Ahmad Heri Firdaus highlighted discrepancies between figures reported by the Investment and Downstream Industry Ministry/BKPM and data from BPS.

“I do not understand why BKPM recorded significantly higher employment absorption than BPS, although the BPS reporting period was longer. BKPM only records part of investment activities, while BPS covers the entire economy,” Ahmad said during an INDEF public discussion on Aug 6.

BKPM data showed that investment realization reached Rp 511 trillion ($28.7 billion) in the second quarter of 2026, creating more than 700,000 jobs between April and June, just three months. BPS data showed that the number of employed people increased by only 522,000 between February and May, a four-month period.

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Danantara’s 400 Percent Revenue Claim still Unverified

President Prabowo Subianto has said that state asset fund Danantara has increased its revenue by around 400 percent, although the figure remains unverified as the fund has yet to publish consolidated financial statements covering its first year of operation.

“I received a report that the income of Danantara has increased by roughly 400 percent. Still, we must audit and verify this,” Subianto said on Aug 7, adding that growth of 200 to 300 percent would still represent a significant increase even if the final figure proved lower. He did not consider it a final result and asked auditing authorities to verify it.

Danantara was launched on Feb 24, 2025, and oversees more than $900 billion in assets from state-owned enterprises and other strategic government assets. It has yet to publish consolidated financial statements, limiting independent assessment of the reported increase.

The president positioned the fund as a key to economic growth and greater efficiency in pursuit of his target of 8 percent GDP growth by 2029.

Danantara Chief Operating Officer Dony Oskaria previously said preparation of the consolidated financials was complicated by the need to combine the accounts of more than 1,000 state-owned companies and eliminate transactions between entities before auditing.

The lack of audited accounts has raised questions over what is driving the reported revenue increase. Center of Reform on Economics (CORE) economist Yusuf Rendy Manilet said the figure could reflect not only improved performance at state-owned enterprises but also changes in dividend management as companies are consolidated under Danantara.

“What matters more is not simply the 400-percent growth, but the quality of that growth,” Yusuf said. He noted that dividends previously recorded as non-tax state revenue are now managed through Danantara, while consolidation could substantially increase the reported scale of revenue and assets.

Yusuf said the key measure would be whether the increase is supported by recurring profits and dividends, stronger cash flow, and higher returns on assets rather than one-off gains, asset revaluations, or accounting effects.

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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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