The three presidential contenders on 12 December pledged to push for the passing of the Asset Forfeiture Bill into law to bolster the country’s fight against corruption.
- Regardless of who wins the presidential election, lawmakers are unlikely to pass the Bill into law before 2025 amid fears that it could be used to scrutinise political parties for their funding sources.
- In the coming years, the Corruption Eradication Commission (KPK) is unlikely to target powerful politicians and officials, as the election frontrunner Prabowo Subianto has pledged to lead an anti-corruption drive focused on prevention, not prosecution.
- Foreign investors will continue to face high integrity risks when engaging with officials and politicians, who could offer operational ease in exchange for facilitation payments.
- Resource nationalism is likely to continue to direct industrial policies in extractive sectors if Prabowo, whose family businesses own mining and agricultural assets, is elected as Indonesia’s next president.
Seize the assets
The three candidates for the 2024 presidential election – Defence Minister Prabowo Subianto, former Central Java governor Ganjar Pranowo and former Jakarta governor Anies Baswedan – took part in their first official debate. All agreed that the Asset Forfeiture Law, which would enable the confiscation of assets from those convicted of graft, was necessary to create a deterrent effect that would support the government’s corruption drive. The government has been struggling to recover state assets stolen through graft despite the KPK convicting more than 1,000 individuals between 2004 and 2022. This includes 344 national and local lawmakers, 24 governors and 162 sub-provincial leaders.
The People’s Representative Council (DPR, main branch of parliament) has included the Asset Forfeiture Bill in the national legislation programme since 2015, but only listed it as a priority bill in 2023. President Joko “Jokowi” Widodo, who will conclude his final term in October 2024, urged the DPR in June to finalise it but there has been no follow-up response from lawmakers. The Council is unlikely to complete its deliberation of the Bill before its current term ends, also in October 2024. The next DPR formed after the 2024 legislative elections is also likely to hang back, making it difficult for the new president to push for the passing of the Bill within his first year.
The large number of elected officials convicted of graft indicates that many politicians are willing to accept funding from any source, potentially even dubious ones like bribes, to cover high election campaign costs. Introducing an asset forfeiture law is likely to increase public scrutiny on the sources of these funds, making the idea unpopular among politicians.
The KPK has since 2019 been incorporated into the civil service, leading to its decline in independence from the government. Although all three presidential candidates have promised to strengthen its role, only Baswedan stated that he would initiate another revision of the 2002 KPK Law to restore the agency’s independence. Election frontrunner Prabowo did not say whether he agreed with the revision, but his campaign manifesto includes his vision of the KPK as a “centre of excellence” within an anti-corruption drive that is focused on prevention rather than prosecution.
If Prabowo wins, the weakened KPK is likely to remain part of the civil service, making it vulnerable to continued government intervention. This means the KPK is likely to avoid targeting politicians from the ruling parties, and focus instead on those with less political shield, including regional leaders and companies that offer them bribes. Foreign investors will continue to face high integrity risks when engaging with officials and politicians who offer favourable treatment in exchange for facilitation payments.
Battle of ideas
The General Election Commission (KPU) has scheduled four more official debates – two for presidential candidates and two for their running mates – until the presidential campaign period concludes on 10 February. This includes one discussing the management of natural resources in Indonesia, which has the world’s largest reserves of nickel – a key element to produce electric vehicle (EV) batteries.
Prabowo, whose running mate is President Jokowi’s son, on 3 December pledged that he would continue to develop mining and agricultural industries through downstream projects if he is elected. He also praised the incumbent for advancing Indonesia’s downstream industrialisation despite international opposition to Indonesia’s decision to ban nickel ore export. Jokowi has introduced the ban since 2020 to build downstream capacities for nickel and turn the country into a hub for the nascent EV industry.
While his two rivals might also support downstream industrialisation, Prabowo is the only one directly linked to the extractive sectors, as he and his family own mining, agricultural and timber companies. While almost all these companies are upstream businesses, downstream industrialisation is an option that is currently being pursued. He was also the leader of the Indonesian Farmers Association (HKTI), which has a strong stance in protecting the interests of farmers and local plantations. Thus, it is within his personal interests to keep resisting international complaints and ensure Indonesia can advance its industrial capacities through downstream investments. Thus, under Prabowo’s presidency, access to raw commodities without a local processing plan will likely narrow and those that can offer such refining processes will likely enjoy benefits for their alignment.
This article is based on a research note originally published in Seerist Core. Find out more about how Seerist’s adaptive artificial intelligence combined with localised geopolitical risk expertise can help you identify, monitor and mitigate risks.