Thomas Rizal, Jakarta – Indonesia is trying to be a haven for investors from home and abroad, but the resource-rich country has a ticking time bomb: preman or "thugs".

The Indonesian term "preman" took inspiration from the Dutch word "vrijman" or "free man". It was what people in the Dutch Indies era used to call informal workers (such as non-contract overseers) and ex-convicts. They often became informal security guards or vigilantes who helped guard colonial interests. In 1987, Indonesian rockstar Ikang Fawzi even released a song titled "Preman" with the lyrics saying how "cold these gangsters look, and how ready they are to attack" just to warn people to avoid them like the plague.

But oh, times have changed. Modern-day thugs are far from what we used to imagine in the past. They no longer carry weapons, but have become well-dressed individuals. To keep up the charade, these criminals pose as members of an actual business group. They force investors into giving them a share in whatever project they are working on. Other companies have even received letters from strangers claiming to be part of mass organizations, asking for holiday bonuses and other fees.

Such extortion has hit Indonesia's electric vehicle (EV) ecosystem, a highly strategic sector that is key for the country's growth.

Senior lawmaker Eddy Soeparno revealed that Chinese EV maker BYD had faced extortion by local civic groups. The company is currently building an EV plant worth Rp 16.8 trillion or approximately $1 billion in Subang. This plant is expected to generate job opportunities for 18,000 people.

An extortion taking place at a major petrochemical project recently made national headlines. The Cilegon regional branch of the Indonesian commerce chamber (Kadin) gained massive attention after its senior members tried to extort China Chengda Engineering. They demanded a "compensation" worth Rp 5 trillion. Chengda is the contractor of the chlor alkali-ethylene dichloride plant that takes up an investment of up to Rp 15 trillion.

Amid these hidden tariffs, Indonesia is dealing with a rising incremental capital-output ratio (ICOR), which measures how efficiently an economy is in turning capital investment into economic output. The higher the ICOR, the less efficient an economy is. In 2021, Indonesia's ICOR stood at 8.6 percent, and dropped to 6.02 percent the following year, but then slightly rose to 6.33 percent in 2023. These ICOR scores are above ASEAN's average, which ranges between 4 percent and 5 percent, including Malaysia (5.4 percent), Thailand (4.4 percent), the Philippines (4.1 percent), and Vietnam (3.7 percent).

If Indonesia does nothing to stop these criminals, it will only lead to dire economic consequences. Indonesia's growth had already slowed to 4.87 percent year-on-year (yoy) in Q1 2025, marking a slower pace as Jakarta had consistently been growing above 5 percent. President Prabowo Subianto aims to supercharge the country's growth to 8 percent within his term. This ambitious goal requires Indonesia to keep increasing its annual investment targets. In 2025 alone, Indonesia aims to attract Rp 1,905.6 trillion in investments. The rise of such threats can also be detrimental for the populous Indonesia's attempt to create jobs for its people. Data showed that as of end-February, the unemployed population rose by around 83,000 compared to the previous year.

Thug-busters

When problems hit the country, the Indonesian government usually sets up task forces to deal with the issue. The same goes for this rise of criminal groups. The government has established a "thug-buster," which is in charge of addressing problematic rogue mass organizations.

Chief Security Minister Budi Gunawan advised the public to immediately report any suspicious activities or extortion by these groups. Home Affairs Minister Tito Karnavian said that the law enforcement – namely the police – would intervene if the organization committed a criminal offense.

"The Law Ministry is in charge of issuing the organization permits. Us, the Home Affairs Ministry, impose administrative sanctions if violations are found," Tito said.

The National Police has launched nationwide operations since early this month to target these thugs, illegal debt collectors, and even anyone who tries to disrupt the industrial estates. National Police chief Listyo Sigit Prabowo said that his team would "make sure to safeguard any government programs related to economic growth and investment growth".

Indonesian Employers Association (Apindo) chairwoman Shinta W Kamdani admitted that her group had received reports from businesses across the archipelago who felt bothered by gangsters and these unexpected fees. Shinta said: "We [Indonesia] might even lose investment because investors don't feel safe investing in Indonesia. ... This calls for collaboration between the government, law enforcement, and industrial stakeholders to create legal certainty and security."

Sarman Simanjorang, deputy chairman of the Indonesian Chamber of Commerce (Kadin), hoped that the government's efforts against local gangsters would not be short-lived. "They should keep this up. ... Business people have paid all official obligations, ranging from taxes to levies. ... If we get extorted on top of all this, it is beyond logic. This [thuggery] has disrupted the business world."

Sarman also said that Kadin had formed a team to investigate the incident. The business group vowed not to hesitate to impose sanctions in case of organizational ethical violations.

Turn over a new leaf

Criminologist Monica Margaret attributed the rise of thuggery to socio-economic inequality. Monica said: "Thuggery comes from people who lack access to a decent life. Those who are marginalized from economic access, education, and social representation often resort to violence."

So what can the government do? According to Aryanto Sutadi, a senior advisor to the police chief, the government should be present in the rehabilitation process by redirecting them to more productive paths – be it through job training or entrepreneurial programs. This way, they can turn over a new leaf.

"These gangsters are human. They are only trying to [earn money] for food. If they get arrested but are not given another way to live their lives, these thugs will only relapse," Aryanto said.

– B-Universe journalists Alfida Rizky Febrianna, Erfan Ma'ruf, and Ichsan Ali contributed to this story.

Source: https://jakartaglobe.id/business/preman-indonesian-thugs-become-investors-worst-nightmar