AmCham Update Vol. 7 #084

Whoosh to be Transferred to Finance Ministry, US will Close Consulate in Medan, Danantara Says it will Issue Financial Statements in Two Months, Officials Downplay Unrest Concerns, Private Developers Take the Lead on Hydropower, Stay-Permit Extortion Case Deepens

Aug 07, 2026

Government Plans to Transfer Whoosh Stake to Finance Ministry

The government plans to transfer Indonesia’s 60 percent stake in Kereta Cepat Indonesia China (KCIC), operator of the Whoosh high-speed railway, from Danantara to the Ministry of Finance as part of a restructuring aimed at addressing the project’s strained financial obligations.

Finance Minister Purbaya Yudhi Sadewa said the transfer should be completed by mid-September, with the stake managed through the Ministry’s Special Mission Vehicles (SMVs). The remaining 40 percent is held by a Chinese consortium, Beijing Yawan HSR Co. Ltd.

Purbaya said the restructuring would not burden the state budget, as KCIC’s assets and liabilities would be managed through SMVs rather than financed directly by the government.

Coordinating Minister for Economic Affairs Airlangga Hartarto said on Aug 6 that the restructuring plan has been favorably received by the Chinese side.

The gleaming Whoosh, Southeast Asia’s first high speed railroad, has been losing money since it opened in October 2023, threatening state railway operator Kereta Api’s solvency. The Indonesian consortium, Pilar Sinergi BUMN Indonesia (PSBI), reported losses of Rp 5.1 trillion ($285 million) in the first half of 2026. Its largest shareholder, Kereta Api, recorded a sharp decline in net profit.

Economists questioned whether the ownership transfer alone would resolve the project’s underlying financial challenges. Airlangga University economics professor Rahma Gafmi said the Finance Ministry’s SMVs specialize primarily in financing and infrastructure management rather than railway operations, potentially creating challenges in overseeing efficiency, maintenance, and safety.

SMVs include Penjamin Infrastruktur Indonesia, Sarana Multi Infrakstruktur, and Indonesia Infrastructure Finance, which are run under the Finance Ministry but are not legally classified as state-owned enterprises.

Permata Bank Chief Economist Josua Pardede said the restructuring would also need to address KCIC’s underlying cash flow and debt-servicing challenges.

“The big PSBI loss showed that the operational revenue and other income were still not enough to meet all costs,” Josua told The Jakarta Post on Aug. 6.

Constructed under former President Joko Widodo’s administration, Whoosh has incurred a $7.3 billion debt, which includes a $1.2 billion cost overrun. Approximately 75 percent of the funding was provided as loans by the China Development Bank, with the remaining 25 percent through equity contributions from KCIC.

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US to Close Consulate in Medan

In another sign of the shrinking scope of American diplomacy abroad, the US State Department plans to close its mission in Medan and four other international locations, Reuters reported on Aug 4.

Formal notice of the action was sent by the State Department to the US Congress last week, Reuters reported. In addition to Medan, posts will be closed St. George's, Grenada; Nagoya, Japan; Douala, Cameroon; and Winnipeg, Canada.

In normal times, it is rare for the US to close multiple diplomatic missions but under President Donald Trump, the State Department had already looked at closing nearly a dozen foreign missions, it was reported earlier. The shrinking is intended to further align the US bureaucracy with Trump’s "America First" agenda.

In Medan, construction of a new $250 million US Consulate building has apparently stopped, The Jakarta Post reported on Aug 7. It was scheduled to open last year.

Staff at the consulate said they had not been officially informed of the closure and only heard about it from new reports.

When asked about the closure, the State Department did not offer any specifics. “The Department is committed to following Congressional Notification procedures including post closures. We have nothing further to report at this time,” the State Department said in an email attributed to a spokesperson. “We are focused on ensuring our diplomatic footprint is efficient, effective and delivers results for the American people.”

Critics have said that shrinking Washington’s diplomatic presence – including the dismantling of the US Agency for International Development – undermines US leadership, leaving space for China and Russia to fill the void.

A spokesperson for the Indonesian Foreign Ministry said Jakarta is following developments but has not been formally notified by Washington.

“The US government's decision will not affect the diplomatic relations between the two countries, which have been strong thus far,” the spokesperson said on Aug 5.

Under former President Joe Biden, the US government opened several foreign missions, all of them in the Asia-Pacific region.

The US has had a consulate in Medan since 1949. The city is also home to a Chinese consulate.

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Danantara to Issue Financial Statements within Two Months

Following rising concerns from investors over its governance, sovereign wealth fund Danantara says it should complete its first consolidated financial statements within the next two months.

Danantara Chief Operating Officer Dony Oskaria said on Aug 3 that the process was taking longer than expected due to the scale of the state- owned enterprise (SOE) portfolio.

“This is the first year, so naturally it takes time. Roughly another one to two months,” Dony told reporters,

Danantara is now working on the pre-audit process and has hired financial consultants to develop a standardized form for the consolidated statements.

Dony said the final financial statements would be audited by Indonesia’s Supreme Audit Agency before publication.

The consolidation involves more than 1,000 companies, he said, requiring the elimination of overlapping financial records and transactions among SOEs. Dony said the process should become soother in the future as Danantara establishes a standardized accounting system.

“Once we have established the pattern, the elimination process across all the companies will be much easier in subsequent years,” he said.

Danantara plans to publish its 2025 consolidated financial statements, which will offer the first comprehensive view of the financial position of Indonesia’s massive state-owned sector under the new asset-management structure. sector under the new asset-management structure.

The process has been complicated by irregularities at the state-owned post office, Pos Indonesia. Danantara said its due diligence review identified long-standing financial and governance issues, including suspected manipulation of financial statements. No criminal probe has been announced.

Dipo Satria Ramli, an economist at the Center of Reform on Economics (CORE) Indonesia, said the planned disclosure could help Danantara establish management standards in line with international sovereign wealth fund practices.

“We certainly appreciate Danantara’s decision to finally release its financial statements. But when it comes to a commitment to transparency and good governance, publishing the report alone is not enough,” Dipo said.

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Officials Downplay Independence Day Unrest Worries

Spreading rumors about a repeat of last year’s unrest during the Independence Day period are unfounded, according to Coordinating Minister for Political and Security Affairs Djamari Chaniago.

“The domestic situation is very stable. Everything taking place across the country remains under the coordination of the TNI, the National Police and BIN,” Djamari said at a joint press conference on Aug 5.

The briefing was attended by Attorney General Sanitiar Burhanuddin, National Police Chief General Listyo Sigit Prabowo, Indonesian Armed Forces Commander General Agus Subiyanto, and State Intelligence Agency (BIN) Head Muhammad Herindra.

A flurry of social media posts have claimed that large-scale protests would take place on several dates in August, raising concerns over a possible repeat of last year’s unrest. Videos from the August 2025 protests have also resurfaced online and been falsely labeled as current.

“We are continuing to coordinate to ensure that all activities leading up to the Aug 17 celebrations can proceed safely and smoothly,” Listyo said.

He added that authorities were investigating the creators of videos falsely depicting violent protests and warned that those spreading such information could face legal action.

Djamari dismissed speculation that the installation of high-security fencing at shopping malls in Jakarta, Surabaya, and other cities was linked to security threats.

He also said the government does not prohibit public demonstrations as long as they remain peaceful and comply with the law.

“There is no prohibition for demonstrations. Public protests are a legitimate way for people to express their views,” Djamari said. “What is prohibited are anarchic or violent acts.”

Previously, Jakarta Governor Pramono Anung raised concerns over the new security fences at several shopping malls, arguing that excessive measures could create negative perceptions of the city.

“Based on coordination with security forces and law enforcement agencies across various sectors, I am confident that Jakarta remains safe,” Pramono said on Aug. 1.

Budihardjo Iduansjah, Chairman of the Indonesian Retail and Shopping Center Tenants Association, said the fences are intended to manage the flow of visitors entering and exiting malls as a way to keep shopping centers orderly and convenient.

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Private Developers to Lead Majority of Hydropower Projects

Independent power producers (IPPs) will lead most of Indonesia’s hydropower development under the 2025-2034 Electricity Supply Business Plan (RUPTL), while state-owned electricity company PLN focuses on transmission infrastructure and grid integration.

PLN’s Director of Project Management and New and Renewable Energy, Suroso Isnandar, said the plan includes 315 hydropower and mini-hydropower projects with a combined capacity of 11.7 gigawatts (GW).

Private developers will handle 262 projects – 48 hydropower plants and 214 mini-hydropower plants with a combined capacity of 1,110 MW. PLN and its subsidiaries will develop the remaining 53 projects.

“The numbers clearly demonstrate where the bulk of the work lies,” Suroso said at the Indonesia Hydropower Summit on August 5, adding that PLN would prioritize the transmission networks needed to connect the projects to the national grid, making cooperation with private developers critical to implementation.

Suroso said that pumped-storage hydropower will also play an important role in maintaining grid stability as variable renewable energy capacity expands. The 1,040 MW Upper Cisokan project, located across the West Bandung and Cianjur districts in West Java, is scheduled to begin operating in 2028, followed by a planned 500 MW facility in North Sumatra in 2030.

Suroso said PLN would continue assessing the competitiveness of pumped storage as battery energy storage systems become increasingly affordable.

Ministry of National Development Planning (Bappenas) Deputy for Infrastructure Abdul Malik Sadat said project readiness and adherence to recognized sustainability standards would be essential to attracting financing.

The 174 MW Asahan III plant in North Sumatra opened in 2024 as Indonesia’s first hydropower project certified sustainable, marking an important milestone for the sector.

Indonesia continues to lag behind its renewable-energy targets. Renewables accounted for around 16 percent of the energy mix last year, while renewable generating capacity increased by only 4.4 GW between 2015 and 2024, compared with a 25.9 GW increase in fossil-fuel capacity.

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More Searches and Seizures in KPK Stay Permit Extortion Case

The Corruption Eradication Commission (KPK) is continuing its probe into allegations of extortion linked to the processing of foreigners’ stay permits.

In the latest development, investigators searched the Central Jakarta Immigration Office and South Jakarta Immigration Office on Aug 4, according to KPK spokesman Budi Prasetyo.

At the South Jakarta office, investigators seized Rp 118,600,000 ($6,600) from the office of Winarko, the head of the office.

Investigators also seized documents and electronic evidence from both offices. The materials and cash will be analyzed to strengthen the evidence in the case, Budi said.

The KPK is also investigating potential involvement of others in what seems to have been a well-organized and deeply entrenched scheme to make money off the issuance of stay permits. Companies have long complained that processing permits for expatriate employees in Indonesia can be cumbersome and time-consuming.

In June, investigators searched the immigration office in Denpasar, as well as the offices of two private visa agencies, seizing documents and electronic evidence.

The KPK has named eight suspects in the case, including Silmy Karim, the former deputy immigration minister.

The other suspects are former acting director general of immigration Saffar Muhammad Godam; Stay Permit Director Jaya Saputra; sub-directors Bagus Bramantyo and Tessar Bayu Setyaji; former Central Jakarta immigration chief Ronald Arman Abdullah; ITAS status-change team head Juniadi Sri Priambudi; and immigration staff member Gusti Bernardiansyah.

All eight suspects have been detained by the KPK.

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The taxation of Benefits in Kind (BIK) in Indonesia is complex. “BIK” include more arrangements than expected, and with limited exclusions/exemptions . With pressure on the Tax Authority to maximise tax revenue, and the implementation of more integrated tax reporting systems, companies are expected to carefully assess how benefits provided to employees are recognised in accounting systems, valued, and reported for tax purposes. In addition, the tax treatment of BIK is not just an employer issue, but has implications for the workforce if the impact is not well understood and explained. Thus, comprehensive understanding is essential to ensure compliance while managing workforce costs and employee relations effectively.

In this event, we will guide participants through the taxation of Benefits in Kind in Indonesia, discuss common challenges faced by employers, and explore practical approaches to structuring and reporting employee benefits. Participants will gain valuable insights into compliance requirements.

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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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