Ruth Dea Juwita, Jakarta – Weak transparency in public institutions creates opportunities for mismanagement and corruption that could threaten Indonesia's economic ambitions, unless the greater state role in the economy is matched by stronger oversight and accountability, antigraft groups have warned.

Indonesia Corruption Watch (ICW) researcher Zararah Azhim Syah said President Prabowo Subianto 's administration had become "increasingly opaque" with government processes appearing "designed to avoid transparency", which complicates public scrutiny.

A lack of transparency has spread across government, he continued, pointing to presidential trips and visits, the recovery of state losses, spending on flagship programs and the fact that this year's budget implementation list (DIPA) has not yet been released.

"It's becoming more apparent, such as when the cabinet secretary responds, 'it's right there,' instead of providing answers [to reporters' questions]," Azhim told The Jakarta Post on Monday. "That reflects the Prabowo administration's unwillingness to be transparent."

The country's growing reliance on state-owned enterprises (SOEs) under state asset fund Danantara could advance "economic capture", should transparency and competition be weakened, said Francois Valerian, chairman of global anticorruption NGO Transparency International.

"There is a governance risk when there is a risk of economic capture, when there is the risk that the economy is being captured by the government or by the party in power and its allies," Valerian said in a sit-down session with the Post on Thursday.

There is "no contradiction" between economic growth and fighting corruption, he continued, arguing that transparent institutions could encourage competition, improve the allocation of public resources and strengthen investor confidence.

He noted that there was nothing wrong with a large public sector as it is a country's sovereign choice to determine the role of SOEs.

However, "there should not be special treatment for SOEs," he continued, adding that SOEs "cannot enjoy the best of both worlds" and "cannot be flexible like private businesses and as opaque as most of the public sector."

The warning comes as Prabowo has pushed for a more active role of SOEs since taking office in October 2024.

These include the nationwide rollout of the free nutritious meal program, the 3 million home initiative and his new mandate to centralize exports of key commodities through PT Danantara Sumberdaya Indonesia (DSI) to oversee shipments of palm oil, coal and ferroalloys.

"The main problem is the decision was made without public consultation, without proper planning, without public participation," said Transparency International Indonesia (TII) secretary-general Danang Widoyoko, describing the approach as "authoritarian legislation" that leaves little room for discussion.

He said Prabowo's administration seemed "not so happy" with the private sector and appeared more inclined to use SOEs in executing economic policies.

Rather than addressing longstanding structural problems, such as under-invoicing and transfer pricing, problems hardly unique to Indonesia, "the government instead chose to expand the state's role in the economy," Danang argued.

The private sector has long complained that the country's regulatory labyrinth is difficult to navigate, creating a lucrative market for "fixers" and middlemen who exploit and extort the loopholes to grease projects through the system.

While the 2020 Job Creation Law sought to simplify regulations and improve the business climate, it instead "created a market" for a new generation of intermediaries, Danang said.

"Complex regulations invite corruption precisely because they create opportunities for intermediaries to manage the system," he said.

Indonesia scored 34 out of 100 in Transparency International's 2025 Corruption Perceptions Index (CPI), placing it 109th among 182 countries surveyed. It marked a three-point drop from its 2024 score.

The Berlin-based watchdog measures perceived levels of public sector corruption, with higher scores indicating cleaner governance.

In the 2025 CPI report, which was published in February, TII recommended that the government halt all national strategic projects (PSN) as part of efforts to curb corruption and restore democratic space, citing the free meals program as an example of weak governance.

Prabowo's key flagship program was at the center of weeks-long student-led protests against the government over public spending, transparency and governance.

The rollout has been marred by mass food poisoning incidents, corruption investigations related to its implementation and mounting questions over budget misuse, adding pressure on the government to tighten oversight and spending.

Experts and civil society groups have also urged the government to release Danantara's overdue 2025 financial statement and provide more insight into its operations, including bond issuance.

Danang said Prabowo's administration appeared less receptive to external recommendations than that of his predecessor Joko "Jokowi" Widodo.

Source: https://asianews.network/weak-transparency-threatens-indonesias-economic-ambitions-watchdogs