AmCham Update Vol. 7 #075

AGO Readies Investigation of Febrie, Prabowo Orders Review of Free Lunches and Cooperatives, Indonesia Investments on Target for 2026, Anti-Trust Law Revision Eyes the Digital Era, Prabowo Praises Indonesia as a ‘Mature’ Nation, Pos Indonesia’s Missed Bond Payment Triggers Downgrade

Jul 17, 2026

AGO Begins Investigating Febrie as Questions Remain

With an air of continued confusion, the Attorney General’s Office (AGO) has begun investigating its former chief corruption prosecutor after assuming control of three cases from the National Police, despite growing calls for the Corruption Eradication Commission (KPK) to take over the politically charged probe.

Police named former Deputy Attorney General for Special Crimes Febrie Adriansyah a suspect for alleged corruption involving state insurer Asabri, debt settlement at a Krakatau Steel subsidiary, and coal procurement for state-owned electricity company PLN. Febrie resigned the day he was named a suspect by police.

The AGO said it had issued orders to continue the cases transferred by the National Police and formed a special team of nine senior prosecutors, several of whom previously served at the KPK, to minimize potential conflicts of interest.

AGO spokesperson Anang Supriatna said the investigations would proceed based on evidence collected by police investigators.

The confusion intensified when the AGO initially said Febrie and lawyer Don Ritto, who was also named a suspect by police, had reverted to witness status under the investigation orders. That idea was soon withdrawn and both remain suspects, although Febrie has not been detained nor seen in public since being named.

The investigations follow coordinated police raids across 13 locations in Greater Jakarta between July 8 and 10, during which investigators seized approximately Rp 543 billion in cash and gold allegedly linked to the three cases.

The mess has drawn intense scrutiny, with student groups, legal organizations, and former Constitutional Court Chief Justice Mahfud MD urging the KPK to take over the investigations, citing concerns over conflicts of interest and procedural integrity.

Political analyst Agung Baskoro of Trias Politika Strategis said the contradictory statements suggested the investigation had been compromised. He pointed to the AGO’s probe into alleged corruption surrounding President Prabowo Subianto’s flagship free nutritious meal program, in which an active police general was among seven suspects named in the case. Roughly a week after that became public, the police launched the raids on properties that included Febrie’s residence.

KPK Chairman Setyo Budiyanto said it was “too early” for the agency to intervene while the AGO was still reviewing the evidence. Meanwhile, the AGO said Febrie remains in Indonesia and can be questioned at any time.

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Prabowo Orders Review of Free Lunches and Village Cooperatives

Two of President Prabowo Subianto’s flagship programs are to be reviewed, signaling looming changes to his free nutritious meals and Red and White cooperative projects, amid controversies surrounding the costly initiatives.

The possible changes were discussed during a meeting on July 15 with several cabinet members whose duties include supervising the two programs. The National Nutrition Agency (BGN), which is in charge of running the free meals initiative, was included.

Speaking after the closed-door meeting, BGN Deputy Chief Agustina Arumsari said the President has called for a thorough review of the free meals program, with a one-month deadline to complete the assessment.

“The president said those who no longer need to receive the Free Nutritious Meals program should no longer be included. However, people in the lowest-income groups, disadvantaged areas, and regions with high stunting prevalence should continue to receive assistance,” Agustina told reporters.

“We don’t want a situation where some students receive meals while others in the same [classroom] do not… The President asked us to consider the psychological aspects and every other implication before making a decision,” Agustina said.

She said the government is also looking at alternatives for food delivery, including the possible use of school canteens instead of relying exclusively on free meal kitchens.

The program, which has a 2026 budget of Rp 268 trillion rupiah (US$19.5 billion), is aimed at providing free food to around 83 million beneficiaries, including schoolchildren and pregnant women in order to fight malnutrition and stunting.

However well intentioned, the program has become a credibility test for the administration, with street protests last month calling for its suspension, growing scrutiny over its high costs, thousands of food poisoning cases and a corruption investigation involving top officials from the National Police and the Indonesian Military (TNI).

Separately, Coordinating Food Minister Zulhas Hasan said the government has decided to expand the role of Red and White cooperatives, allowing them to distribute government assistance, including social aid and subsidized goods.

The cooperatives will also buy rice and corn if market prices fall below government-set levels, helping farmers sell their produce at the government price, he said. The cooperatives also drew criticism after mandatory military training for their managers resulted in at least four deaths.

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Incoming Investment on Target, Rosan Reports

While not setting any records, investment realization for Indonesia is on pace to reach this year’s target of Rp 2,041.3 trillion.

For the first half of the year investment realization reached Rp 1,010.6 trillion ($62.3 billion) — 49.5 percent of the government's full-year goal and a 7.2 percent increase year-on-year — Investment minister Rosan Roeslani said at a press conference on July 16.

“Amid geopolitical and geoeconomic challenges in the world, praise be to God, I can convey here that investors’ commitment to invest directly in Indonesia… is still in line with the target set,” Rosan said.

The current pace is below what the country achieved in the past three years. The slowdown began in the fourth quarter of 2025, when growth slowed to 9.7 percent year on year, followed by the current 7.2 percent.

Domestic and foreign investment contributed almost equally to the total, at Rp 502.9 trillion and Rp 507.6 trillion. Foreign direct investment (FDI) accelerated sharply through the year, rising from 8.5 percent year-on-year in the first quarter to 27 percent in the second.

The basic metals and fabricated metal products industry, excluding machinery and equipment, drew the largest share of investment, at Rp 150.4 trillion, or 14.9 percent of the total.

Singapore remained Indonesia's largest source of FDI for the half-year overall, at $8.8 billion, followed by Hong Kong ($7.6 billion), China ($3.9 billion), Japan ($1.9 billion), and the United States ($1.7 billion). Notably, Hong Kong briefly overtook Singapore as the top source during the second quarter alone — its first time atop the rankings in a decade. Rosan attributed this to a rise in Chinese investment routed through Hong Kong.

Realized investment generated 1,448,862 jobs in the first half of the year, up roughly 15 percent from the same period in 2025.

Maybank Indonesia Chief Economist Juniman said that despite the growth, investment quality has yet to translate into stronger job creation, pointing to licensing and regulatory delays as a key bottleneck. “Many investors have already signed memorandums of understanding, but realization has been postponed. Some were expected to begin building factories but ultimately failed to move forward because of permit-related issues,” he told reporters on July 16.

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Anti-Trust Law Revision Eyes Digital Era

Indonesia's Business Competition Supervisory Commission (KPPU) is pushing to complete revisions to Law 5/1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition this year, arguing that the 25-year-old legislation is no longer adequate to regulate the digital economy.

KPPU Chairman Gopprera Panggabean said the current law leaves regulators without the tools to address today's data-driven markets. "In 1999, digital commerce did not yet exist, which is why the current law does not regulate it," Gopprera said on July 15.

He said market power can no longer be assessed solely through prices and market share, but must also account for data ownership, digital ecosystems and cross-border business activities.

The proposed revision would expand the definition of business actors to include overseas companies whose activities impact the Indonesian market. It would also introduce new enforcement tools, including recognition of digital evidence, algorithmic collusion, leniency programs and stronger digital forensic capabilities.

Lawmakers have also emphasized the need for reform. During a public hearing with experts and academics on June 29, the deputy chairman of House of Representatives (DPR) Commission VI, Adisatrya Suryo Sulisto, said algorithm-driven business models and dominant digital platforms require a more adaptive regulatory framework, according to Kontan.

Industry groups have likewise called for a balanced approach. Wiratama Institute Executive Director Aulia Rachman Alfahmy said the revision should strengthen KPPU's authority to scrutinize platform algorithms while providing adaptive regulations that promote accountability and fair competition, according to Kompas.

Separately, Indonesian E-Commerce Association (idEA) Chairman Budi Primawan said on July 16 that the revised law should recognize new sources of market power – including data, algorithms, network effects, and digital ecosystems – while preserving fair competition, regulatory certainty and consumer protection. Budi said iDEA is ready to provide industry input and underscored the importance of industry-informed policymaking.

The revision of Law 5/1999 is included in the 2025–2029 National Legislative Program (Prolegnas) and is under deliberation in the DPR.

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Long-Delayed Masela Launch Prompts Prabowo to Praise Indonesian Leadership

Speaking on the occasion of the groundbreaking of the long-delayed $20.95 billion Abadi Masela liquefied natural gas (LNG) project, President Prabowo Subianto rejected what he described as foreign perceptions that underestimate Indonesia's capabilities.

Speaking virtually on July 16 during the groundbreaking for the national strategic project, Prabowo said Indonesia should no longer be viewed as weak or incapable.

"Perhaps because Indonesians are friendly, some people think we are weak. They say Indonesians are relaxed or lazy," Prabowo said. "They do not see our fishermen, farmers, and workers who leave home before dawn and return after dark."

He said Indonesia also expects international partners to recognize that the country is led by capable decision-makers. "Indonesia is now a mature nation. Our leaders are not naive, not foolish, and not afraid," he said.

The Abadi Masela offshore LNG project in Maluku's Tanimbar Islands is one of the country’s largest energy investments. It has been in development for nearly three decades.

Operated by Japan's INPEX Masela Ltd, with Pertamina Hulu Energi and Malaysia's Petronas as partners, the project is expected to produce 9.5 million tons of LNG annually, along with 35,000 barrels of condensate per day.

Changes to Masela’s operating plan forced delays and caused one original partner, Shell, to back away from the deal. In 2016, Indonesia required the LNG processing facility to be built onshore rather than offshore, which forced developers to redesign the project and significantly increased costs.

Energy Minister Bahlil Lahadalia said local residents from the Tanimbar Islands and other parts of Maluku would be prioritized for job recruitment. Some students from the region have already been sent to the Energy and Mineral Polytechnic in Cepu for training before joining the project.

Subianto instructed sovereign wealth fund Danantara, Pertamina, and other state-owned enterprises to provide technical training for local residents and help local businesses participate in the project.

The project is expected to create around 12,000 direct construction jobs and employ up to 1,000 workers during operations, while generating more than $44 billion in state revenue over its lifetime, according to the Energy Ministry.

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Pos Indonesia’s Missed Bond Payment Highlights SOE Risks

The credit rating downgrade of Pos Indonesia after a bond repayment default is raising questions about how state asset fund Danantara will handle struggling state-owned enterprises (SOEs).

Experts say similar defaults could undermine confidence in government backing and drive up borrowing costs, especially for SOEs involved in public services.

The state post office has expanded into courier and logistics services, financial services and social assistance disbursement but is facing liquidity pressures after missing a Rp 24.1 billion ($1.4 million) payment on its ijarah sukuk (Sharia bond) due on July 8.

On July 14, Fitch Ratings downgraded Pos Indonesia’s long-term rating from “A” to “C” and cut the company’s credit profile to “c” from “bbb,” indicating a drop in the ability to meet financial obligations without external support.

“The delay is temporary and solely related to short-term cash flow conditions. It does not reflect the company’s business continuity or the quality of its services,” Pos Indonesia corporate secretary Iwan Gunawan said in a statement on July 15.

Pos Indonesia told the Indonesia Central Securities Depository (KSEI) it did not have the cash to cover current expenses, largely due to payment of retirement benefits. To meet debt obligations, the company said it was using operating funds and accelerating collection of receivables.

The country’s oldest SOE, Pos Indonesia was established by the Dutch in 1746. Its financial performance deteriorated sharply in 2025 after the government scaled back previous support. Its net income in 2025 was Rp 306 billion, far below the Rp 860 billion target.

Danantara, which oversees all SOEs, had ordered a review of Pos Indonesia’s 2023-2025 financial statements after reports of irregularities and indications of financial manipulation surfaced. The company’s leadership has been changed as a result.

Ronny P. Sasmita, an economics researcher at the Indonesia Strategic and Economic Action Institution, told The Jakarta Post on July 16 that the downgrade points to acute liquidity and risk-management problems as the company struggles to keep pace with industry changes.

The case highlights a broader problem for SOEs caught between commercial demands and public-service obligations, he added. “But an automatic bailout would not necessarily be the answer,” Ronny said. “Rescuing every troubled SOE could create moral hazard and weaken financial discipline.”

Meanwhile, PT Danantara Investment Management has been accepted as an Associate Member of the International Forum of Sovereign Wealth Funds. Danantara Chief Investment Officer Pandu Sjahrir said the acceptance reflects Indonesia's commitment to world-class governance, transparency, and accountability standards.

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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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