THE Indonesian economy has entered a slow lane. Economic growth in the first quarter 2025 was only 4.87% (yoy). Compared to the fourth quarter of 2024, there was a contraction of 0.98%. The storm of layoffs (PHK) continues to hit. The number of layoffs continues to soar from 25,114 people in 2022, 64,855 people in 2023, and 77,965 people, predicted to continue this year.
The alarm of the sluggish economy can be seen from the decline in tax revenue of 10.8% during the first four months of 2025. The government seems to have a big appetite but it can satisfy it. Optimistic about achieving economic growth of 5%, but the government is stingy with spending.
These two sectors contribute 32.50% to gross domestic product (GDP). The automotive industry is the most affected. The decline in four-wheeled vehicle sales that has occurred since 2023 may continue this year. The Association of Indonesian Automotive Industries (Gaikindo) noted that wholesale sales of four-wheeled vehicles in the first four months of 2025 were only 256,368, it was a decrease of 2.9% compared to the same period in 2024 of 264,014. Throughout 2024, fourwheeled vehicle sales fell 13.9% to 865,723 units.
The financing industry (multifinance) was affected even though it was still able to achieve growth. After achieving asset growth of 13.32% in 2023, its growth slowed to 6.52% in 2024. Tragically, the multifinance industry’s profits fell 2.12% last year. According to Infobank Research Bureau in a study entitled of the Rating 130 Multifinance 2025, there were 55 financing companies whose profits declined. In fact, 28 multifinance companies have suffered losses, not including 16 financing companies whose financial performances are unknown because they have not issued financial reports.
There are three major challenges facing the multifinance industry this year. One, the financing market is under pressure from weakening demand as a result of the decline in people’s purchasing power.
Two, tight liquidity that has occurred in recent years due to competition to seize public funds not only between banking products but also Government Securities (SBN) issued by the government and Rupiah Securities of Bank Indonesia (SRBI) issued by Bank Indonesia (BI). More attractive yields make investors prefer to buy SBN or SRBI.
Three, the risk of declining financing quality due to declining or even lost public income due to being hit by a storm of layoffs. The number of victims of layoffs from 2022 to May 2025 is estimated to reach almost 200,000 people. The narrow job market can be seen from the increasing unemployment rate.
BE CAUTIOUS OF CREEPING NPF, BECAUSE OF THUGGERY IS RISIN, DEBT COLLECTORS ARE RECOILING
The thuggery shown by certain mass organizations has made the public restless. How could it not be? The thugs offer protection and a false sense of security to business actors and the public. Then, they ask for tribute through intimidation. The hassle is when dealing with mass organizations that have close ties with the authorities, such as Gerakan Rakyat Indonesia Bersatu (Grib) Jaya.
The government has formed an Integrated Task Force for Handling Thugs and Mass Organizations in early May 2025. In the third week of May, Grib Jaya dared to occupy land and demand a ransom of IDR 5 billion from the Meteorology, Climatology, and Geophysics Agency (BMKG) until this state institution reported the mass organization to the police. They dare to challenge state institutions. They will challenge private business doers, too.
Therefore, the thuggery actions of members of mass organizations make investors and business doers worried. Sanny Iskandar, Chairman of the Industrial Estate Association, said that thuggery has caused losses of up to hundreds of trillions of rupiah due to investments that were cancelled or left industrial areas.
The Indonesian Finance Companies Association (APPI) admitted that many of its members have been intimidated by mass organizations, especially when taking vehicles from customers or consumers who are in arrears on installments. In fact, according to the provisions of the law, if the debtor does not fulfill his obligation to pay installments and does not respond to the summons, he/she must hand over his/her vehicle or the finance company has the right to withdraw.
The withdrawal process becomes complicated when problematic debtors ask for support from mass organizations to hinder the execution process. Even so, finance companies must maintain asset quality so that they continue to carry out the collection process until the execution of the guarantee according to procedure. “If necessary, ask for help from the court even though the company can actually carry out the execution with a fiduciary certificate, but difficulties often arise. So if difficulties occur, the finance company will carry out the legal process through the assistance of the court and law enforcement officers,” said Suwandi Wiratno, APPI General Chairperson to Infobank last month.
In addition to triggering worries for entrepreneurs, thuggery under the guise of mass organizations also makes it difficult for debt collectors (DC). The DCs deployed by agents working with financing companies to recover assets from multifinance’s problematic financing of IDR 14.55 trillion (as of February 2025) are also struggling even more because many debtors dare to fight back when their fiduciary guarantees are executed.
In fact, they choose to lie low and avoid clashes, especially against Grib Jaya. “We choose to lie low. Even if we go down, we have to be careful. We carry an official assignment letter, but if there is a clash in the field with mass organizations, it is a bit risky. The Matel (mata elang—a debt collector whose job is to pay attention the road users in order to find problematic vehicles) also cannot hang out on the side of the road, because they can be taken away by the police’s thug eradication team,” said Piter, one of the professional DCs to Infobank last month.
Although many debtors are uncooperative and even dare to fight back, financing companies must not be discouraged. If the thuggery of naughty debtors is allowed to continue, it will have an impact on nonperforming financing (NPF). In terms of industry, multifinance NPF has experienced an upward trend from 2.32% in 2022, 2.44% in 2023, 2.70% in 2024, and 2.71% in March 2025.
NPF is like a thorn in the flesh for finance companies. If not resolved, the health of its portfolio will be disrupted. The next impact will be profitability and solvency which will affect the level of trust of shareholders and banks as the main source of multifinance funding.
Multifinance experts generally understand the condition of the market. They have been familiar with stubborn debtors. For this reason, multifinance companies must be more careful in distributing financing amidst weak purchasing power and the rise of mass organization thuggery. According to Infobank, there are several steps that financing companies must pay attention to.
The first is strengthening governance and risk management to ensure that the company can protect assets from risks that may occur so that its strategic goals can be achieved. The second is tracing the background of prospective debtors, including analysing their behaviour on social media whether they are safe to be given financing or not.
The third is checking the validity of the documents owned by the prospective debtors, including the truth of supporting documents such as pay slips, financial reports, or certificates of asset ownership.
The fourth is avoiding areas that have become “red zones” because of the many mass organizations whose members often carry out acts of thuggery, especially, the thugs support customers not to pay debt installments.
Agusman, Chief Executive of the Supervisory Board of Financing Institutions, Venture Capital, Microfinance Institutions and Other Financial Services Institutions of the Financial Services Authority (OJK), reminded financing companies to consistently conduct comprehensive credit analysis of prospective debtors. “Including utilizing the infrastructure that is currently available to conduct credit analysis, such as credit scoring, SLIK, analysis of social media behaviours of debtors, and ensuring that the data provided by the debtors are correct and are not misleading,” he told Infobank in May.
Agusman added that multifinance companies must also analyse data and community behaviours in areas considered “red zones.” “Financing companies also need to conduct data and behaviours analysis on distribution in areas with high levels of individuals protecting problematic debtors. Furthermore, financing companies must also always comply with the provisions of laws and regulations, norms, and ethics in collecting and executing problematic debtors,” he added.
Because Indonesia’s territory is vast, financing companies also have the option to avoid areas that are prone to mass organization thuggery. “With the increasing number of mass organization individuals or NGO that protect problematic debtors, financing companies have begun to avoid certain “red zone” areas that cause a lot of problematic credit (non performing loans),” said Suwandi Wiratno.
The problem is the number of mass organizations is also very large and spread throughout Indonesia. According to data from the Ministry of Home Affairs, the number of mass organizations in Indonesia has reached 540,015 organizations.
The number of people who join mass organization has the potential to continue to grow. Moreover, if the state fails to overcome the employment crisis, carry out the function of public service and protection, selective law enforcement, and the government prioritizes political interests. Mass organizations can be used as political tools to mobilize the masses, rally opinion, increase electoral votes, and suppress political opponents.
However, if the government prioritizes economic interests over politics, it should listen feedback from investors and business actors who expect the ease of doing business without the interference from thuggery of mass organization. This is because the thuggery has clearly added to the list of problems in the business world such as inefficient bureaucracy, complicated licensing, expensive logistics costs, and unclear legal certainty.
Now, in the middle of weak market demand, investors and business people including APPI members are very hopeful of the seriousness of the Integrated Task Force for Handling Thugs and Mass Organizations formed by the government. However, do they dare to firmly eradicate thuggery by members of mass organizations who have close ties with the authorities?
The alarm of the sluggish economy can be seen from the decline in tax revenue of 10.8% during the first four months of 2025. The government seems to have a big appetite but it can satisfy it. Optimistic about achieving economic growth of 5%, but the government is stingy with spending.
