The VAT Controversy and Corruption’s Unfair Verdict: Prabowo’s Early Challenges

Hello, welcome to Indonesia at a crossroads newsletter! 

You are reading volume 3, which I wrote from Jakarta. Yes, good news. I just moved back to Jakarta, thanks to Prabowo. 

Starting today, this newsletter will be published every Monday at 5 PM Jakarta time to better serve our subscribers in Europe and the United Kingdom. Thank you for your continued support and for subscribing! 

Last year was marked by political changes and corruption challenges for Indonesia. Our country held simultaneous presidential and regional elections, marking the end of Joko “Jokowi” Widodo’s era and the beginning of a new chapter under Prabowo Subianto. However, it also became a grim milestone, as Jokowi’s political dynasty was solidified, and law enforcement weakened, making the eradication of corruption increasingly challenging and sluggish with no strong anti-corruption institution to rely on.

The VAT Vortex

This year kicked off with a surprising decision regarding Prabowo’s new economic package, following last year’s government plan to increase the Value Added Tax (VAT) from 11% to 12%. The plan has sparked protests both online and offline since its announcement. A petition with over 200,000 signatures was launched by Bareng Warga, demanding the cancellation of the plan. There were also protests held directly in front of the Presidential Palace and the Ministry of Finance offices.