Hello!

Welcome to another edition of Nusantara Notes. Two days into writing this newsletter, it has become even more apparent to me that I will never run out of things to summarize for you, dear readers. Never a boring day in Indonesia, as they say.

Tapera, huh? The government’s public housing program has ruffled more than a few feathers lately, even if the intention is to provide affordable housing for everyone. We’ll go deeper into that topic below, but not before we look at the latest in political goss ahead of the highly-anticipated Pilkada.

Happy reading and I’ll see you back here tomorrow.

Cheers,

Andra

Law/Politics

Pilkada on the Horizon

The Presidential/Legislative elections are so February 2024. Next up, all 37 Indonesian provinces will once again go to the polls on November 27, 2024 for Pilkada (Regional Elections), in which new governors, mayors, regents, and their deputies will be chosen to lead their respective regions for the next five years.

Jakarta, which last had its Pilkada in supremely traumatic fashion in 2017, is among the battle grounds. There’s already growing support, particularly from PKS (Prosperous Justice Party), for former governor and 2024 Presidential Election runner-up Anies Baswedan to once again take the stage. Meanwhile, mega TV star Raffi Ahmad is one name few expected to be talked up for a ticket.

In North Sumatera, former Jakarta governor Basuki “Ahok” Tjahaja Purnama seems to be the candidate of choice for PDI-P (The Indonesian Democratic Party of Struggle). Bobby Nasution, President Joko Widodo’s son-in-law and current Medan mayor, is set to run for the North Sumatera gubernatorial role with Gerindra (Great Indonesia Movement) party backing. He said he won’t lose sleep over a possible match-up with Ahok.

Ganjar Pranowo, another losing candidate in the 2024 Presidential Election, has served as Central Java governor for the maximum two terms allowed, and does not appear to be on PDI-P’s list for any Pilkada this year.

In Other News

• Disgraced former Agriculture Minister Syahrul Yasin Limpo tapped into the ministry’s coffers to buy birthday flowers and cake for dangdut singer Nayunda Nabila, a witness at his graft hearing said. Syahrul is currently on trial for alleged extortion amounting to Rp44.5 billion and accepting bribes totaling Rp40.6 billion between 2020 and 2023. The court previously heard that Syahrul often misappropriated ministry funds for himself and his family.

• Indonesia has expressed strong support for the International Court of Justice (ICJ) order for Israel to halt its Rafah offensive. This stance aligns with Indonesia's longstanding support for Palestinian self-determination and condemnation of Israel's actions, including illegal settlements and apartheid policies.

Business/Economy

Collective Homes

Indonesians are in uproar over the Tapera (Public Housing Savings) program, which mandates workers from the public and private sectors to contribute 3% of their monthly salary. For employees, this is split into 2.5% from the worker and 0.5% from the employer, while self-employed workers must cover the full 3% themselves.

The primary benefit is access to financing for home ownership, construction, or renovation, with a focus on first-time homebuyers — the program aims to primarily support low-income workers who do not yet own a home. Participants who are already home owners can treat Tapera as a savings scheme, as they may withdraw the funds they have contributed at the end of their participatory period.

The law mandating the program was actually passed in 2020, and it once again entered the public’s consciousness this week after it was ratified on May 20. All eligible participants are required to register for the program by 2027, or seven years after it was passed into law.

On Monday, President Joko Widodo said “all of the calculations were considered,” implying that the program wouldn’t place much of a financial burden on Indonesian workers. Apindo (The Indonesian Employers Association) wholeheartedly disagrees in their rejection of Tapera, arguing that workers are already burdened by other government savings schemes.

In Other News

• President Jokowi’s administration appears set to cut energy subsidies by IDR 67.1 trillion for the 2025 APBN (State Budget). There’s speculation that the funds would be redirected toward President-elect Prabowo Subianto’s free school lunch program, which was one of the cornerstones of his election campaign.

• Banks in Indonesia are reducing their funding to fintech lending due to high risks associated with the sector, such as increased default rates. Even so, banking contributions to fintech lending still account for 53.21% of total outstanding loans as of March 2024, up from 44.57% the previous year. The reduction in funding is attributed to regulatory interest rate caps and the growing risk of non-performing loans in the fintech industry.

• Despite a moratorium on new cement plants in Indonesia, the South Aceh Regency administration gave the green light to a Chinese company to construct a cement factory in the region. This decision, aimed at boosting local employment and the economy, has generated controversy due to concerns about market oversupply and environmental impacts.

• Qatar Airways is suspending its Doha-Medan route on June 1, just five months after its inauguration, citing market demand and operational efficiency.

Everything Else

• The Meteorology, Climatology, and Geophysics Agency (BMKG) forecasts that drought will dominate much of Indonesia from June to September. This prediction follows the onset of the dry season in various regions, including parts of Sumatra, Java, Bali, and Nusa Tenggara. BMKG emphasizes the need for preparedness to mitigate the impacts of the prolonged dry conditions, particularly in areas prone to forest fires and water shortages.

• A man's body was found inside a water tank at a house in Pondok Aren, South Tangerang, on Monday. The discovery was made after residents noticed a foul odor and cloudy water. The body has yet to be identified.

• A 27-year-old woman in Yogyakarta died following a breast enhancement procedure at a beauty salon, which allegedly did not have the medical license to carry out the operation.

• Indonesian filmmaker Mouly Surya, perhaps best known for directing the highly-acclaimed Marlina the Murderer in Four Acts, is making her English-language feature film debut with Trigger Warning, starring Jessica Alba. The movie drops on June 21 on Netflix.