Indonesia is poised to implement significant reforms in its legal system in 2025, marking a pivotal moment in the nation’s legislative evolution. These changes encompass the introduction of a new Criminal Code, the establishment of a state investment agency, and proposed shifts in electoral processes, each carrying profound implications for the country’s legal and political landscape.

Enactment of the New Criminal Code

After decades of deliberation, Indonesia has enacted a new Criminal Code, replacing the colonial-era laws that have long governed its legal system. This comprehensive legislation, formalized as Law No. 1/2023, is set to take effect on January 2, 2026, following a three-year transitional period.

The new code comprises 624 articles divided into two main sections: “General Provisions” and “Crime.” Notably, it eliminates the traditional distinction between crimes and lesser misdemeanors, aiming for a more streamlined legal framework. Additionally, the code acknowledges ‘living laws’ (adat or customary rules), allowing for the incorporation of local customs in legal proceedings. This inclusion reflects Indonesia’s commitment to harmonizing national law with its diverse cultural practices murid keroyok guru .

President Joko Widodo has hailed the new Criminal Code as a monumental step toward modernizing Indonesia’s legal regulations. He emphasized that, after 79 years of independence, the nation finally possesses a Criminal Code that aligns with contemporary values and societal norms.

Establishment of the Danantara Investment Management Agency

In a move to enhance the management of state assets, the Indonesian government has received parliamentary approval to establish the Danantara Investment Management Agency, modeled after Singapore’s Temasek Holdings. With an initial capital of 1,000 trillion rupiah (approximately $61 billion), Danantara will oversee holdings in several major state-owned enterprises, including Bank Mandiri, Bank Rakyat Indonesia, and Pertamina. Collectively, these companies possess assets valued at around $600 billion.

The agency aims to create a “superholding” structure for managing state companies and an investment firm to handle dividends and leverage assets. While this initiative seeks to improve performance and returns from state investments, concerns have been raised about potential political interference, which could affect investor confidence. The government has yet to address these apprehensions publicly.

Proposed Changes to Electoral Processes

President Prabowo Subianto has proposed significant alterations to Indonesia’s electoral system, suggesting the elimination of direct elections for regional leaders to reduce costs. Under this proposal, regional legislatures would appoint governors, mayors, and regents, a system reminiscent of the governance model during the Suharto era.

This proposal has sparked concerns among democracy advocates, who fear it may undermine the democratic reforms established after Suharto’s authoritarian rule. Critics argue that direct elections are essential for ensuring accountability and public participation in the political process. The suggested shift could potentially erode these democratic principles, leading to increased centralization of power.

Expansion of Military Roles in Civilian Affairs

In a related development, President Prabowo has expanded the military’s involvement in civilian functions, assigning them roles in initiatives such as a $28 billion free school meals project and various agricultural programs. Legislation is also underway to permit active-duty military officers to occupy senior government positions.

Supporters of this move argue that the military’s efficiency can enhance the implementation of public programs. However, opponents express concerns that this trend may undermine democratic reforms and blur the lines between military and civilian roles, potentially leading to a resurgence of military influence in governance.

Legislative Priorities and Omissions

The House of Representatives and the government have agreed upon 41 draft bills and revisions for the 2025 Priority National Legislation Program (Prolegnas). Notable inclusions are the Domestic Workers Protection Bill, the Tax Amnesty Bill, and the Cybersecurity Bill. However, the Asset Forfeiture Bill, considered a critical tool in combating corruption, is conspicuously absent from the list.

Advocates for the Asset Forfeiture Bill argue that it represents a groundbreaking legal innovation essential for accelerating the recovery of state losses due to corruption. The omission of this bill from the legislative agenda raises questions about the government’s commitment to anti-corruption efforts and the strengthening of public finances.

As Indonesia approaches 2025, these major overhauls in its legal and political systems signify a transformative period. The successful implementation of these reforms will require careful navigation to balance modernization with the preservation of democratic principles and cultural values.