Social welfare, PNS/POLRI/TNI salary increase, Mahfud resigns, Tikok+Tokopedia, ROK/ID data theft
💰 The politicization of social welfare
👮♂️ Government workers, military, and police get a raise
🚪 Mahfud MD pulls the pin and resigns
🤝 TikTok completes acquisition of Tokopedia
🔬 ROK investigates Indonesian engineers for attempted data theft
The politicization of social welfare
The government faced heat this week for distributing cash handouts only weeks before the presidential election. On Monday, the government announced that over three months beginning in February, it would distribute IDR200,000 per month to 18.8 million low-income earners to help address cost of living pressures. Rather than being distributed in tranches of IDR200,000 (US$12) month by month, the entire IDR600,000 (US$36) was transferred to recipients’ bank accounts this week, less than two weeks before the presidential election.
These payments ocurred alongside an additional payment of IDR400,000 (US$24) that will be paid in February as part of the El Niño social welfare payment. As a result, individuals who are eligible for both payments could receive as much as IDR1 million (US$ 63), which is half a month’s salary in some provinces.
According to Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto, these welfare programs have been designed to address food affordability in Indonesia, which has risen significantly over the last 12 months. He explained that these programs were funded by the federal social welfare budget, which is IDR496 trillion (US$ 31 billion). For those that are counting, that’s IDR20 trillion (US$1.2 billion) more than the social welfare budget allocation in 2023.
Some critics have labelled the payments as blatant pork-barrelling aimed at winning the favor of low-income earners. However, Jokowi knocked back these claims by stressing that the social welfare budget had been approved by the DPR and was therefore not related to the presidential election. The timing of the payments and the presidential elections is just a big old coincidence it seems….
The way I see it is that whether Jokowi says so or not, recipients will likely credit him for these payments, which should translate to support for the Prabowo-Gibran as the establishment ticket. Looking at survey data, about 40% of low-income voters remain undecided, making them a key demographic to win over in the presidential election.
In addition to boosting the Prabowo-Gibran ticket, this short-term financial stimulus may also help weaken Anies and Ganjar’s messaging on the cost of living, which has resonated with low-income earners until now.
Government workers, military, and police all get a raise
On January 26, a presidential regulation came into force, increasing the salary for government workers, military, and police personnel by around 8%. The changes are effective as of January 1, meaning these workers should have already received the additional cash in their latest pay cheque. In addition to getting a salary boost, they also received a 12% increase in their monthly pension contribution.
Regarding the raise, Jokowi said that it would enhance the performance and well-being of government employees and would boost economic growth. Notably, it is the first salary increase for these workers since 2019.
Some political commentators including Indonesian political savant Pak Burhanuddin Muhtadi suggested that the increase was politically-motivated. ak Burhan explained that Turkish Prime Minister Recep Tayyip Erdoğan implemented a similar policy in Turkey prior to an election, which translated into a net positive boost to his electability. While police and military personnel cannot vote in elections, government workers can, meaning that the raise could help win over these voters ahead of February 14.
Mahfud MD pulls the pin and resigns
Mahfud MD, Indonesia’s Coordinating Minister for Political, Legal, and Security Affairs, resigned on Thursday, ending a week of speculation. Mahfud stated that his resignation would allow him to speak more freely about the government and open the door for other ministers to resign.
Mahfud also emphasised that ministers should not use their positions to benefit a presidential candidate since it seems that quite a few ministers, including Prabowo, are doing just that. Mahfud’s resignation also sets the stage for other ministers to follow suit amidst rumours that several are dissatisfied with Jokowi and the government’s clear bias towards Prabowo Subianto's candidacy.
In what appeared to be slightly rehearsed, less than 24 hours after Mahfud’s announcement, Basuki Tjahaja Purnama also known as Ahok — the Governor of Jakarta before Anies Baswedan — announced his resignation as president commissioner of Pertamina, Indonesia’s state-owned oil company. Ahok stated that he had to resign in order to join Ganjar’s campaign team.
Despite his reduced national profile, Ahok remains popular among the country’s intelligentsia and minorities. It's great to see Ahok reengaging in politics, especially after facing harsh consequences in the past, including a two-year prison sentence for blasphemy.
Who’s replacing Mahfud?
Jokowi has appointed Tito Karnarvian, who currently serves as the Minister of Internal Affairs (2019-present), as interim Coordinating Minister for Political, Legal, and Security Affairs. For those that are unaware, Tito is a Jokowi loyalist and previously served as the Head of the Indonesian National Police (2016 and 2019).
But with 12 days to go will it make a difference?
Probably not. Having said that, by dragging this issue out for over a week, the media has given the issue a lot of oxygen and provided the Ganjar-Mahfud ticket with a lot of free publicity at the expense of the other two campaigns. Furthermore, it has also fuelled rumors that cracks are emerging in Jokowi’s cabinet, an issue that hasn’t seemed to go away.
TikTok completes acquisition of Tokopedia
TikTok completed its acquisition of Indonesian e-commerce site Tokopedia for $1.5 billion this week, obtaining a 75% stake in the company. The purchase followed a regulation issued by the Ministry of Trade in September 2023, which amongst other things, prohibited social commerce platforms from: 1) operating without an e-commerce license; and 2) allowing payments to occur within social media apps.
What prompted the regulation?
Minister for Cooperatives and Small and Medium Enterprises Teten Masduki began kicking up a fuss in mid-2023 by claiming that TikTok Shop was hurting small and medium enterprises operating in Tanah Abang Market — a large and famous market in Central Jakarta. Pak Teten built enough momentum behind this campaign —which in part served to boost his own public profile and political ambitions — to convince the Minister of Trade, Zulkifli Hassan, to issue a regulation that would effectively ban TikTok Shop in its current form.
How did TikTok Shop re-enter the market?
After a few months out of the market, TikTok announced in December that it would re-launch TikTok Shop by acquiring Indonesia’s e-commerce champion, Tokopedia. This transaction would provide TikTok Shop with an e-commerce license while it worked on a strategy to split its payment process from its social media app. Since this announcement, the Ministry of Trade has provided TikTok a four-month trial period to ensure compliance with the regulation.
What happens to GoTo?
GoTo still owns 25% of Tokopedia and won’t have to invest any further capital into its operations. This means that whatever it receives will be cash in the bank and might help offset the losses suffered by Gojek, which is still struggling to reach profitability.
ROK investigates Indonesian engineers over data theft
South Korea’s Defence Acquisition Administration Program has initiated an investigation into two Indonesian engineers following an alleged attempted data theft from Korea Aerospace Industries, a South Korean aerospace and defense company. The data relates to the KF-21 fighter jet, a defense joint venture between South Korea and Indonesia that began way back in 2015.
In 2015, Indonesia and South Korea established the joint venture to codevelop the KF-21 fighter jet. As part of the joint venture, Indonesia was required to provide 20% of the project’s cost, roughly US$6.5 billion. However, by 2017, Indonesia had fallen behind its payment schedule and owed approximately US$670 million. Having still not recieved the funds by 2020, South Korea sent Indoensia’s roughly 100 engineers home, leaving the project in limbo.
After some serious discussions between the two countries in September 2023, Jokowi managed restart the project by reaffirming Indonesia’s commitment. With things all hunky dory again, Indonesia’s engineers returned to South Korea to continue working on the project.
In January, two Indonesian engineers sent to South Korea reportedly accessed sensitive information about the KF-21 fighter jet and attempted to transfer technical files to a USB drive. After being caught in the act, the South Korean authorities detained the engineers and barred them from leaving the country. The investigation is ongoing while the authorities work to ascertain what data the engineers were after.
All opinions are my own.