Istimewa
THE House of Representatives (DPR) officially elected Thomas Djiwandono as Deputy Governor (DG) of Bank Indonesia (BI) at a Plenary Session on
January 27, 2026. Previously, Thomas served as Deputy Minister of Finance, and his name was proposed by the President as a candidate for BI DG after Juda Agung, who had served as BI DG since January 6, 2022, resigned on January 13, 2026. Thomas’s election met many predictions. He beat out two other internal candidates from BI: Dicky Kartikoyono (Assistant Governor - Head of the BI Payment System Policy Department) and Solikin M. Juhro (Head of the BI Macroprudential Policy Department). Meanwhile, Juda Agung was mentioned as a strong candidate for Deputy Minister of Finance to replace Thomas.
The exchange of positions between Thomas and Juda was widely seen as a “swap” of BI-Ministry of Finance officials, potentially facilitating government intervention in BI, an independent authority since the 1999 reforms. This was because, for the first time in history, BI’s DG was filled by talent from outside BI. So far, external figures have been more likely to fill the positions of governor or senior deputy governor of Bank Indonesia.
“This seems like fiscal intervention in the monetary sector, even though representatives from the Ministry of Finance were present at previous BI DG meetings. The centralization of the Prabowo administration is increasingly apparent, perhaps inspired by Donald Trump’s intervention in the Fed, only with a different approach: Trump criminalized the Fed’s Governor,” Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies, told Infobank on January 26, 2026.
After the Indonesian economy was devastated by the 1998 monetary crisis, at the end of 2020, during the COVID-19 pandemic, a draft revision of the Bank Indonesia Law was circulated, which mentioned a Monetary Board. This was criticized by the public, leading to the draft that eventually became Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (P2SK), which upholds the spirit of stability, integration, and strengthened governance.
According to several sources contacted by Infobank, there are two possible outcomes of this swap. The first outcome is: it opens a career path for Thomas, who studied postgraduate studies at Johns Hopkins University School of Advanced International Studies (SAIS), Washington, focusing on International Relations and International Economics and has experience in finance, government, and politics. Thomas is the son of J. Soedradjad Djiwandono, a professor who served as Minister of Trade and Governor of Bank Indonesia during the New Order era.
The second outcome is, it is an extraordinary measure by the government to address the threat of a fiscal crisis that has nearly violated the law. Based on Chapter VIB, Article 40, letter d of the P2SK Law, a person eligible for appointment as a member of the BI Board of Governors “must not be an administrator and/ or member of a political party at the time of nomination.” Thomas is an active member of the Gerindra Party and served as Treasurer. He also ran for the West Kalimantan legislative branch.
Following a wave of mass protests in late August 2025, President Prabowo Subianto appointed Purbaya Yudhi Sadewa as Minister of Finance, replacing Sri Mulyani. However, Purbaya’s initiatives have yet to yield results. The fiscal deficit widened to Rp 695.1 trillion, the rupiah exchange rate continued to decline, reaching Rp 17,000 per USD, the real sector remained stagnant, public purchasing power remained weak, and undisbursed loans reached Rp 2,439.20 trillion by year’s end.
The year of 2025 concluded with a continued decline in automotive sales, plunging 7.2% to 803,687 units, and layoffs reaching 88,519 people, up from 77,965 in 2024. The poverty rate remains very high, reaching 171 million, or 60.3% of the population, according to the World Bank.
After the fiscal deficit reached Rp 695.1 trillion in 2025, or 2.92% of gross domestic product (GDP), it is predicted to reach the safe limit of 3% in 2026. A fiscal crisis could occur due to low state revenues, which in 2025 only reached 91% of the 2025 target, while tax revenues were only 87.6%.
Of the 2026 state revenue target of Rp 3,153.6 trillion, 19.01% was allocated to debt interest payments. The debt interest payment amounted to Rp 599.44 trillion, an 8.43% increase from the 2025 APBN of Rp 552.85 trillion. Meanwhile, social protection spending reached Rp 508.2 trillion, an 8.6% increase from the Rp 468.1 trillion in 2025.
This does not include the budget for free nutritious meals (MBG), which will increase from Rp 71 trillion in 2025 to Rp 335 trillion in 2026 to expand the target population for free lunches, including pregnant women and the elderly.
Consequently, the Financial Services Authority’s (OJK) move to accelerate access to financing for micro, small, and medium enterprises (MSMEs) through OJK Regulation Number 19 of 2025 has not empowered MSMEs. The rate of MSME credit growth continues to accelerate, even contracting 0.3% annually as of November 2025. Bank Indonesia (BI) recorded that credit growth throughout 2025 will remain in the single digits, at only 9.3%, supported by corporate credit, which will increase by 14.60%.
In addition to the rupiah’s depreciation predicted to exceed Rp17,000 per USD, the government is also facing a large financing gap, especially if state revenues remain low while the state budget must pay debt interest and social spending. In November 2025, OJK issued a letter of appeal to 38 banks in the Banking Group based on Core Capital (KBMI) 1 to consolidate. Beyond these 38 banks, there were 22 regional development banks (BPD) with capital below Rp 6 trillion.
OJK’s appeal served as a strong signal: banks must have strong resilience.
| This means that the Financial Services Authority (OJK) may encourage, but not force, or even pressure, banks. If OJK enforces mergers and acquisitions, 22 regional governments will lose control of regional development banks (BPD). Furthermore, there is still ample room for credit growth in Indonesia, with the credit-to-GDP ratio only at 40%. A surge in foreign ownership occurred after the 1998 monetary crisis. |
59 BANKS OF KBMI 1: WHICH BANKS WILL BE TAKEN BY FOREIGN INVESTORS?
Owners and bankers at 59 commercial banks are at a crossroads. They have been urged by the Financial Services Authority (OJK) to increase their capital to a minimum of Rp 6 trillion. Even if they choose to increase their capital to Rp 6 trillion, much of the capital they have in the banks is still idle. According to Infobank Research Bureau, the average CAR (Capital Ratio) for banks in KBMI 1, or those with capital of Rp 6 trillion or less, is 45.98%, with nine of them having a CAR above 50%.
In addition to their still substantial CAR, the minimum capital requirement is Rp 3 trillion for KBMI 1 banks. During the 1998 monetary crisis. As of September 2025, 31 banks had successfully recorded profit growth while three state-owned banks experienced declining profits.
This means that the Financial Services Authority (OJK) may encourage, but not force, or even pressure, banks. If OJK enforces mergers and acquisitions, 22 regional governments will lose control of regional development banks (BPD). Furthermore, there is still ample room for credit growth in Indonesia, with the credit-to-GDP ratio only at 40%. A surge in foreign ownership occurred after the 1998 monetary crisis.
According to data from Infobank Research Bureau, when the banking industry was struggling to recover from its downturn, the asset share of foreign-owned banks was only 12.90% in 2000. In 2005, after the government’s divestment program for recapitalized banks, the asset share of foreign-owned banks skyrocketed to 44.33% and then slightly decreased to 43.79% in 2010.
The asset share of foreign-owned banks shrank drastically after the transfer of majority ownership of Bank Central Asia (BCA) from Farindo Investment (Mauritius) to Dwimuria Investama Andalan, owned by Robert Budi Hartono and Bambang Hartono of the Djarum Group, at the end of 2016. In 2017, the asset share of foreign-owned banks also decreased to 29.64%.
The number of banks acquired by foreigners continued to grow, reaching 39 by the end of 2025, but their asset share declined to 25.32%. Eight state-owned banks (BUMN), 27 regional development banks (BPD), and 31 banks owned by national entrepreneurs still controlled 74.68% of the asset share in 2025.
According to data from Infobank Research Bureau, of the 14 countries whose banks operate in the Indonesian market, these two countries have the largest number of banks. Japan has MUFG Bank, Bank Danamon Indonesia, SMBC Indonesia, Bank Mizuho Indonesia, Bank J Trust Indonesia, Bank BTPN Syariah, and Bank Resona Perdania.
Meanwhile, South Korea has KB Bank, Bank Woori Saudara Indonesia 1906, Bank KEB Hana Indonesia, Bank Shinhan Indonesia, Bank IBK Indonesia, Bank Oke Indonesia, and KB Bank Syariah. Other countries, such as Singapore, have five banks, China has four, and the United States has three banks in Indonesia. So, what is the performance of the 39 investor-owned commercial banks from 14 countries in Indonesia? (See Table: Financial Performance of Commercial Banks by Ownership).
According to Infobank Research Bureau, with 39 banks, to increase in the future due to the three factors.
Besides India, 14 countries whose banks have already entered the Indonesian banking market have credit-to-GDP ratios above 100%. For example, Japan has reached 185%, South Korea 143%, China 156%, and even Thailand has reached 147%.
The second factor is the Financial Services Authority (OJK)’s call for banks in this group to increase capital is a strong signal that the regulator may even want to reduce the number of banks. As was the case when banking supervision was still under Bank Indonesia (BI) through the Indonesian Banking Architecture (API) in 2025, and OJK’s grouping of banks based on Commercial Bank Business Activities (BUKU) in 2012, followed by the grouping of banks based on the Indonesian Banking Index (KBMI) in 2021.
The third factor is the challenges of the banking business are increasingly diverse, and banks must demonstrate greater resilience, as evidenced by their capital.
With every growth in assets, bank owners understand that their banks’ capital will decrease. Therefore, even without being told to consolidate by OJK, they are likely already considering this. However, if banks in KBMI are still growing healthily to carry out their intermediation function and their capital adequacy ratio is still very high and far from their needs, let these banks survive without being forced to merge or be sold to foreign investors.
January 27, 2026. Previously, Thomas served as Deputy Minister of Finance, and his name was proposed by the President as a candidate for BI DG after Juda Agung, who had served as BI DG since January 6, 2022, resigned on January 13, 2026. Thomas’s election met many predictions. He beat out two other internal candidates from BI: Dicky Kartikoyono (Assistant Governor - Head of the BI Payment System Policy Department) and Solikin M. Juhro (Head of the BI Macroprudential Policy Department). Meanwhile, Juda Agung was mentioned as a strong candidate for Deputy Minister of Finance to replace Thomas.
