Event Summary
On 17 February 2026, the Minister of Finance promulgated Regulation Number 7 of 2026, requiring that 58% of funds allocated for village development need to be redirected to President Prabowo’s program of Red and White Village Cooperative (Koperasi Merah Putih, KDMP). Whereas village funds used to be distributed by the village head and local government, the KDMP operates under a centralized, hierarchical structure from the national level, and has been criticized for a lack of transparency and public participation in its policy-making process. The funds are specifically being used for the construction and development of the cooperatives but their budget plans have not been disclosed to the public or the local government. It has been reported that in practice the cuts to the village funds have been as high as 70%.
The removal of these funds from public scrutiny adds to recent concerns about an increasing lack of transparency and corruption. According to the 2025 Corruption Perceptions Index (CPI) data from Transparency International Indonesia (TII), released in February 2026, Indonesia’s score decreased to 34 out of 100, down from 37 the previous year. This decline resulted in Indonesia falling 10 places in the global ranking, from 99th to 109th out of 182 countries. Shrinking civic space was the primary factor behind this drop, as it weakened civil society oversight, suppressed activists and journalists, and undermined anti-corruption efforts.
According to CPI 2025, TII reported that Indonesia, a nation recognized for its democratic system, is not exempt from the ongoing decline in leadership quality. The large-scale wave of demonstrations that occurred throughout 2025, revealed public demands focused on transparency in the state budget and the misuse of resources by public officials, while highlighting the strengthening of political patronage, symptoms of power consolidation through political parties, the military, and state-owned enterprises (BUMN). A recent striking example of this has been the proposal to appoint Thomas Djiwandono, President Prabowo’s nephew, as Deputy Governor of the Bank of Indonesia, while he already holds the position of Deputy Minister of Finance. Another nephew of Prabowo, Angga Raka Prabowo, already simultaneously holds the positions of Deputy Minister of Communication and Digital, Head of the Government Communication Agency, and President Commissioner of Telkom. Apart from the enormous amounts of public money he receives as a salary, the fact that his positions are in related fields also raises concerns about the same person regulating the digital sphere that also heads the largest operator in that same sphere.
The fact that a constitutional court ruling had already explicitly prohibited the holding of multiple offices highlights the increasing executive influence over judicial independence and anti-corruption safeguards, signaling a further deterioration of transparency and a centralization of power that is unfavorable to civil society engagement.