- 3 months ago
Protests over a Rp 50M housing allowance for Members of Parliament spiralled into unrest across 32 provinces in Indonesia, resulting in roughly a dozen deaths and rattled markets.
The Jakarta index dropped 2%, the rupiah slid, and investor confidence wavered.
What happens next matters for Malaysia’s cross-border trade, investment flows, and ASEAN stability.
Join NIAGA Spotlight as we unpack how politics, populism, and markets collide—with insights from Yohanes Sulaiman, Associate Professor, Universitas Jenderal Achmad Yani (UNJANI), Cimahi, Indonesia and Non-resident Fellow, National Bureau of Asian Research, Seattle, Washington, USA.
The Jakarta index dropped 2%, the rupiah slid, and investor confidence wavered.
What happens next matters for Malaysia’s cross-border trade, investment flows, and ASEAN stability.
Join NIAGA Spotlight as we unpack how politics, populism, and markets collide—with insights from Yohanes Sulaiman, Associate Professor, Universitas Jenderal Achmad Yani (UNJANI), Cimahi, Indonesia and Non-resident Fellow, National Bureau of Asian Research, Seattle, Washington, USA.
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NewsTranscript
00:00Hello and welcome to Niaga Spotlight with me Tamina Khosji. Niaga Spotlight takes us to the
00:15week in economic analysis and future affairs. So basically on this week we are spotlighting
00:21a very recent issue which was the protests in Indonesia and how it actually impacted markets
00:26and sent a little bit of a shockwave across ASEAN. Now of course in late August Indonesia's
00:31largest unrest in years erupted over lawmakers 50 million rupiah monthly housing allowance about
00:3810 times Jakarta's minimum wage. Now within days at least five people were killed, 1,240 detained
00:44and losses hit an estimated 50 billion rupiah. Markets also blinked in response. The Jakarta
00:51composite index slid about 2%, the rupiah weakened by 0.9% and the Bank of Indonesia did have to
00:59intervene. On Niaga Spotlight today we break down how street anger translated into a market shock,
01:05what it means for Malaysia's trade supply chains and investor confidence and whether or not ASEAN's
01:11Southeast Asia's largest economy can steady the ship over the last quarter of 2025. Joining me
01:17online now is Yohannes Sulaiman who's Associate Professor with Universitas Jenderal Ahmad Yani,
01:23Bunjani, Simahi, Indonesia and he's also a non-resident fellow at the National Bureau of Asian Research,
01:29Seattle, Washington, USA. A very good morning to you Yohannes. Thank you so much for making time
01:34to join us. How are you this morning? Fine thank you and thank you very much for inviting me. My pleasure
01:40to be here. Absolutely Yohannes. Let's dive straight into the topic at hand beginning with a look at
01:46elite privilege and how that can lead to legitimacy risk as well as market risks. Now to frame the
01:54entire issue, the protests of course were triggered by lawmakers 50 million rupiah per month monthly
02:01housing allowance widely framed as being roughly 10 times or so Jakarta's minimum wage. Now this perhaps
02:07serves as an emblem of Jakarta of elite detachment during a cost of living squeeze. Let's go beyond
02:15the outrage, Yohannes, and look at how visible privilege can also corrode the state-society compact.
02:24Well, as you mentioned, I mean, I mean, the allowance, the 50 million allowance is basically
02:32what the way they saw that bring the camera back. In addition, that the parliamentarians also behave
02:40badly. One of the parliamentarians basically openly said that those who criticize the allowance are
02:46stupid. Actually, it is like worse than stupid. He said it was scope block, which is like a very,
02:51very... We understand that term in Malaysia as well. Very well. Exactly. And of course,
02:57with the fact that parliamentary sessions globally, not just in Indonesia, Malaysia are broadcast
03:02online. Then, of course, the sentiment spreads about the insensitivity, right? Yes. And of course,
03:11the fact that just a month before, a couple of agencies in Indonesia got shocking news that their
03:18tax was increased, their property tax was increased by 1,000 percent was causing uproar. Like, hey, we are
03:26getting taxed to death here. But you got an increase in allowance, then and then you behave ostentiously.
03:34They are wearing all those luxuries and, you know, and then going over the place like Paris, London
03:41and whatever. I mean, they were like basically out of touch. Absolutely. So being this out of touch also,
03:49aside from corroding the state society compact, let's look at how it also then goes forward in
03:56raising governance risk premia and also some volatility in equities, effects, even across ASEAN,
04:03considering, of course, the size of Indonesia's economy.
04:06Well, we actually got a new minister of finance and he was replacing Sri Muglani who was already
04:19expressed her desire to retire several times already and forcefully earlier last week when her house was
04:30torched down, was looted by, by, by, by, by, by, by looters. And then she basically said that, look, I'm through, I'm done with this.
04:39And of course, the new ministers come in and saying that, oh yeah, I'm going to bring the
04:45Indian stock market to index to 36,000. And then I'm going to, I mean, to, to settle all these economic problems in three months.
04:54And honestly, I mean, I prefer somebody who's just not talk much, but get things done.
05:03I mean, I agree that you need to, to calm the market down. Like you said, I mean, I mean, all these
05:10unresisting problems, the ASEAN economy is in trouble because Indonesia is big, but you are not
05:17creating calmness. You are not exceding calmness by saying outrageous thing. I mean, it makes people
05:25think that you are not also in touch and that's problematic.
05:33Exactly. It may give the impression about looking at the credibility risk then, because replacing a
05:38minister does not mean instantly that trust can be rebuilt back. So the removal, of course, of finance
05:44minister, Sri Mulyani, and of course, replacement with Prabaya Yodi Sadewa, it once again did again
05:51jolt markets for a while. Johannes, does sidelining such high credibility technocrats signal policy
05:58loosening that lifts growth, or perhaps it's a sort of a interim credibility discount that does
06:05actually raise interim funding costs as well as FX risk?
06:10It's kind of, it is both. I mean, if you are loosening spending and then, and then you
06:16basically like throwing money to the system, the problem is, are you throwing it just for
06:21the sake of creating growth or because there is something fundamental that really needs more,
06:28more circulation in the society? I mean, we are here as a problem because the credibility problem
06:36itself feeds to this entire thing. Like, if the government really show that they are prudent
06:41with money, they are not wasting money, and then they are printing money that people say,
06:46yeah, they must have something to do with it. But the problem is if the minister of finance
06:52himself is not having that much credibility, and then the government also does not really show
06:58really spending, but just free money, the question is how to pay them. And then you will end up with
07:04something like Zimbabwe, where the inflation rate was very high, and it will hurt the market. So,
07:10I'm very worried about the current situation.
07:13Absolutely, because it clearly becomes, it behooves a question about if growth targets are chasing,
07:20let's say, an 8%, but institutions weaken in the meanwhile, it's not necessarily that you will have
07:26faster GDP or even slower investment. Thanks very much for the perspectives in so far, Johannes.
07:32Let's move on into digging deeper into the structured descent as a negotiation technology or tactic.
07:41Now, the protesters during the earlier days, they consolidated around the 17 plus 8 demands.
07:48Time-bound asks from police accountability to economic relief, which actually turned the street anger
07:55into a negotiating framework. Some of your thoughts observing this unfold.
08:03Well, again, like you mentioned earlier, and I completely agree, we are talking about credibility here.
08:08And the question is whether the government is actually listening to people. I mean, they can,
08:14they will say, they just say that, yeah, we will accept the demands. But the problem is whether they will do the
08:22demands. Because, I mean, because it is far different than just listening and reconsidering versus just do what
08:30expected, what asked. And what happened is that the governments say that they are going to
08:37determine to look at what one of the demands, which is the asset seizure proposal. But the law itself is very imperfect.
08:46So, there are concerns that the police can just use the law to seize people's property based just on suspicions.
08:55Like, let's say, I'm a police, and I tell that you are committing crime. And of course, the question is,
09:02you will ask back, like, okay, where's the proof? But the police just say, no, I'm taking your property first.
09:08Then we can talk about proof. That's how the law is at this current draft. And the problem is if they don't,
09:19if they don't fix the weaknesses, if they don't fix the, I mean, the draft here, and then just,
09:26and then just, like, publish it and pass it in the parliament, and it just, it will just create
09:34more uncertainties, more chaos, and more, and more problems. So again, and then, and for, and then
09:41also for many people, again, the question is, can I trust the government? Or are they just saying that
09:48they are listening, and then they do their, I mean, their own things, which is very problematic. And,
09:53and again, the Minister of Finance also said, okay, those 17 plus eight demand are just from, like,
09:59a small segment of society, once the economy going back, then they will still sell it. I mean,
10:05it's already showing that they don't take this seriously. And it's worrying.
10:11Exactly. And perhaps it points towards an assumption that this episodic unrest can move towards
10:19bargaining. But do you feel that markets, on the other hand, are ready for these so-called policy for
10:25peace swaps? And let's say if another episodic unrest were to break out, do you feel it would take
10:33that, perhaps, to move towards more concrete structural measures and changes in laws which
10:41are currently rolling out, as you described, in a very unjust manner?
10:48At this point, I think the market is still wait and see. I mean, the index has been recovered,
10:53but it is mostly from the domestic investment, because companies are looking at their own stock
11:00that are very cheap, and they are starting to buy back their companies, and that creates the
11:06median increase in the index. But overall, I think what we still have here, that the market is still
11:12discounting it. Although they are not yet in the panic area, but still, in my opinion, it is very
11:19concerning, because the market, I don't think that the market really trusts this new, I mean, the government
11:27will do what it says. I mean, if the market really trusts the government, I think you will see the, I mean,
11:33the index just skyrocketed, maybe like 8,000 or 9,000, I don't know. I just, I'm just checking up numbers there.
11:41But because it just recovered slightly, so I don't really think that it shows any, I mean, any trust. And not to
11:50mention the fact that they are also concerned whether the government is publishing the number, I mean,
11:56truthfully. Because remember, in the last quarter, we had, the government declared that they have five, we have
12:025.2% economic growth, and many people say that, look, it's just bank. It is just, it is just,
12:10they just messaged the number. It is not a real number. So, basically, it is like the book say, lies and
12:18like them lies and statistics.
12:20Yes, wider statistical figures may not necessarily reflect the economic reality, especially of the
12:26masses. Johannes, thank you for the insights. And so far, we take a short break now. We'll be right back
12:31with Niaga Spotlight and Johannes Sulaiman sharing with us more perspectives on protests and markets and
12:37Indonesia's ASEAN shockwave.
13:01Welcome back. Still with me, Tamina Kaoschi. And today on Niaga Spotlight, we're taking a deep dive into
13:06looking at protests and markets and, of course, Indonesia's shockwave across ASEAN. Johannes Sulaiman
13:13joins me online to continue the discussion. Johannes, now let's zoom in on how the road tragedy evolved
13:20into wider economic risk. So, to frame it, of course, back on the 28th of August, Afan Kurniawan,
13:2821 years old only, a delivery rider, was killed by a police armored vehicle near Indonesia's parliament,
13:33which is what was the spark for igniting nationwide anger. Now, in the aftermath, of course, close to
13:391,500-plus arrests, about 55 billion rupiah in damages have also been reported. The Jakarta Composite
13:47Index commensurately dropped over 2.2 percent. The rupiah has weakened about 0.9 percent. And Bank of
13:54Indonesia also did intervene. So, even TikTok Live was temporarily suspended as solidarity orders surge
14:01for gig riders. So, let's discuss, in your perspective, how one act of state violence,
14:07amplified then by the power of gig platforms, transforms a protest into, firstly, logistics
14:16paralysis. And that is what actually occurred in the immediate aftermath.
14:21Well, I mean, if you look at the killing of Afan Kurniawan, you have to put it in the context. I mean,
14:31earlier we already mentioned about the parliamentary and ostentious living, that people just pissed off with
14:37them. Now, you also have here another element, which is the police brutality. People look at the video of what
14:45happened. Like, this police tactical vehicle was hitting really, really fast in the middle of crowd,
14:53and just hit him, and rather than stopping to rescue him, just do and just hit him again. Like, I mean,
15:02and people now look at this, I mean, like the parliamentary arrogance, the minister of thought, and then
15:09police brutality, and you get a very, very volatile mix. And, I mean, nobody was surprised that the
15:16protests erupted bigger the next day. And, I mean, and besides the fact that the president
15:25spoke in front of national TV saying that, okay, I mean, we regret the killing and we regret the death,
15:31and then, please calm down. Nobody's listening to him, because everybody saw that even though, I mean,
15:38even his speech didn't really address the root of the problem. He kept saying that there was
15:44interference. So, again, what people look at here is out of touch government. So, I mean, so that's,
15:51that's why the protesters exploded. And then, and, and, and of course, now it's died down, because like
15:58you said, the government seems to say that, and we are, they're going to give concession, they already
16:02fired several of the parliamentarians. Actually, the proper word is inactive. They are, they are
16:08putting those parliamentarians in inactive positions. So, they're basically throwing a bone to the
16:14protesters. But, the problem is what happened in the long run. If the minister of finance here,
16:21the new guy didn't, doesn't really show the result. And then in, by the next day, by the next year,
16:29uh, the economy is going bad again because of the budget problem. I mean, one of the biggest
16:35components was probably was very expensive programs. And you cannot fund it out of nowhere. You have to
16:41get the money somewhere. And I think there will be more economic crisis next year.
16:47And even perhaps before next year occurs, there is also the possibility that what we're looking at
16:55really is going to be capital flight and exacerbated risk. But I'd like to zoom in quickly on,
17:02of course, uh, the populist headlines versus the household realities. Now, after the U-turn on perks,
17:08the government, of course, leaned on some symbolic populism, uh, means example, the free meals,
17:14while inflation and living cost stress persisted. Um, and how do such optics fail to reset household
17:21expectations? And in your, um, thoughts, what mix of perhaps targeted transfers or any credible reforms
17:29would actualize, actually help to stabilize sentiments and also markets, perhaps during this
17:36immediate last quarter of 2025, your harness, before we even have to wait for, um, the next year to come
17:44and perhaps for conditions to worsen. Let's talk about what targeted actions the government of the day
17:50could take now. Well, the problem is, if you want to give a targeted subsidies, like payment money to
17:59the poor, again, the question is, where's the money? Because the freelance, the co, the cooperative
18:06already taken a huge chunk of budget. It's already, by the next year, by next year, the freelance program
18:12already ate like 10% of the entire budget. And of course, to get all the money for the freelance program
18:20to the other programs, they are cutting back, uh, back on the government expenses. And the government
18:27expenses in many cases are actually the stimulus to the economy. And then when you say that, okay,
18:35more targeted approach to the poor people. And again, the question is, where's the money? Because
18:39the money is already gone. And I think what, uh, like you said, there was a capital flight. Why? Because
18:44the investors look at the numbers and they don't like it. And now the minister of finance is saying that,
18:51yeah, I'm going to throw more money to the system. Hopefully it will go better. But I think unless the
19:00government starts cutting back on the program, such as the freelance program, I'm not sure economic
19:08will go better. I hope I'm wrong. I hope sincerely that I am wrong here. But unless the government cut all
19:17those, uh, spendings, then there's no way things will go better in the future because investors don't like what happened to me.
19:28Fair points over there. And also perhaps as an observation, some earlier tightening and budget reallocations
19:35also did stokes a resentment in education and health. Then of course, that led up to the August spark, which lit it. Um, so, um, how should perhaps the, uh,
19:45uh, market meaning, um, other countries, uh, neighboring Malaysia included and around ASEAN read austerity in
19:52Indonesia and observe it as a potential vulnerability that might also convert quickly into market shocks.
20:00And are there perhaps any early fiscal signs, which we should be watching out for collectively?
20:11Question. I mean, when we talk about austerity,
20:16to be honest, I like austerity. I think the government need to cut spending, but the problem is
20:21for what? Are you going to cut those, uh, to cut the spending in order to create a far more efficient
20:28government? Or is the money going to another wasteful program? So I'm not saying that austerity is all bad.
20:36Sometimes you need austerity when they say expenses are already way too big and then creating a lot of
20:42graft corruption and whatever else. So, and the problem is that's not what happened here. It is austerity to fund
20:50highly inefficient, highly wasteful, and unclear whether it has any benefit to the program,
20:59of the program. And there's a problem here. So what other countries should look, in my opinion, that first
21:08is whether the government is going to double down on this. They already increase the number
21:16for the freelance next year. And the question is, of course, it will overrun. I mean, they already targeted
21:24for quite a lot of money for this year. And it's already, and they already use all the money by June.
21:31And then, and then, and then I saw the budget and I don't think that the budget for the freelance
21:38is realistic because they, I mean, because it just costs a lot of money. So that's what I think investors
21:45should look at, whether the government is actually increasing the fiscal discipline, whether the government
21:52was saying that they are, I mean, they are doing what the market said, but actually adding more waste.
22:02And to be honest, I don't see at this point, there is a nice trajectory, but that the Minister of Finance
22:08say, yeah, I'm going to throw your money, but the problem is, I don't know, like, how it will increase
22:15economic growth. Very true indeed. Yes, so much to ponder on and also perhaps looking at the design
22:26whereby which it is rolled out, right? Because cutting social buffers is indeed like perhaps
22:31shorting your own domestic stability. It might look like it's cheap or affordable upfront, but costly in
22:38spreads a little bit later. I think you make some really distinct points there, which I hope the
22:43appropriate policy makers are heeding attention to. It isn't just about wider financial figures and
22:50numbers, but whether discerning that the grassroots wider populations are actually able to not only live
22:59hand to mouth, but perhaps have a little bit of buffer to have some dignity in their daily lives.
23:05Thank you, Johannes, for the insights in so far. Let's look at the fact that moving along and turning
23:12out the conversation, Indonesia is also Malaysia's largest ASEAN's trading partner. So perhaps
23:21there may also be the opportunity for further unrest in the near future. What type of security level
23:29indicators should Malaysian firms track or look for as leading signals for maybe supply chain related stress?
23:37Yes. At this point, at this point, I mean, what the market should look is whether, I mean,
23:47is whether the government is pursuing, I mean, more taxes in this, in the sense like, okay, when you ask,
23:57when I say that more taxes, that means that the government really needs money at this point. The government
24:02wants to get more money, but the policy, they don't know how. Well, aside of like, more taxes to the
24:11firms. So I think what really, we are really disturbing is now is when the government is trying to raise more
24:19taxes from the already stressed businesses Indonesia, then it will lead to more business closure.
24:25And that will create, as you know, like more, more, more blockades, I mean, and then more, more,
24:33more unemployment. And then, and then, and then, and then when the government start cracking down
24:39on the students, on the protesters, there were already warnings about that the government may impose
24:48civil, you know, civil emergency to handle the protesters. But I think that's actually a bad policy,
24:54because it's kind of showing the government that they are basically closed the door to compromise.
25:02So, if I were businesses, I would look at what the government is going to do now.
25:10And perhaps the next month cycle will be what is
25:14truly crucial to tell us what the trajectory is going to be until the end of the year.
25:19Johannes, thank you so very much for your deep and very thoughtful insights. Indeed,
25:23it's been an absolute pleasure having you on the show.
25:27My pleasure to be here. Thank you for inviting me.
25:30Not at all. Well, that's all we have time for today. But before we close out,
25:36Indonesia's unrest is, of course, a regional risk story as well. And over the next quarter,
25:41three signals might be perhaps the most important to look at. Rupiah stability. If the US dollar versus
25:47the Indonesian rupiah pushes past, say, 16,500, capital flight risk does indeed rise.
25:54Policy credibility and also watching fiscal moves after Sri Mulyani's exit were for real reform versus
26:00empty populism, to reiterate what Johanna shared with us. And, of course, logistics disruptions.
26:06This could be looking at port slowdowns, transport closures. And this might signal supply chain
26:12stress for Malaysia. Indonesia's path will indeed shape ASEAN's markets. And these are a couple of
26:18your early warning signs. I'm Tamina Kausji signing off for now. We'll see you again next week with more
26:24economic analysis and insights. Here's to a productive week ahead.
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