Indonesia Grapples With 'Institutionalized Extortion'

Seemingly upright civic organizations lead the charge for bribes

By: Ainur Rohmah

A viral video that circulated widely earlier this year has ignited public outrage and forced authorities into action over a surge of extortion cases by members of seemingly upright civil society organizations. The footage, recorded secretly, captured individuals claiming to be representatives of the Cilegon branch of the Indonesian Chamber of Commerce and Industry (Kadin) demanding Rp5 trillion (US$308.3 million) in non-tendered project allocations from a Chinese contractor. The company, China Chengda Engineering, is working on a Rp15 trillion (US$950 million) chemical plant under PT Chandra Asri Alkali, a subsidiary of Chandra Asri Pacific, owned by conglomerate Prajogo Pangestu.

The plant is designated as a National Strategic Project (PSN) for the 2025–2029 period and is expected to create thousands of jobs, reduce Indonesia’s reliance on imports, and generate up to Rp5 trillion annually in foreign exchange revenue. But instead of celebrating the investment, the project found itself entangled in demand from Chamber officials, one of the country’s most prominent civic groups, or ormas. The government is grappling with a surge of these cases targeting businesses, an issue plaguing the investment climate for decades, but has grown worse. These acts of coercion have become so rampant and institutionalized that they have prompted President Prabowo Subianto’s administration to establish a national task force aimed at dismantling what some see as a culture of impunity.

In the video, China Chengda representatives were initially open to collaborating with local businesses—if they could demonstrate technical competence. That was summarily dismissed by the Kadin members, who insisted that Rp5 trillion of the project value be awarded directly to them regardless of capability. The individuals, including the head of Kadin Cilegon, Muhammad Salim, have since been named as criminal suspects.

This incident adds to a growing list of intimidation and extortion cases targeting private businesses by ormas, a trend that has accelerated:

• In March, an organization called Jagoan Cikiwul in Bekasi demanded "donations" from a local business, threatening to block road access if their request was denied.

• In April, Vietnamese electric vehicle manufacturer VinFast confirmed that its construction efforts in Subang, West Java, were temporarily disrupted by interference from a local ormas.

• In May, Members of Pemuda Pancasila, a powerful nationalist organization, clashed with employees of PT BCI over a parking lot concession outside a public hospital in Banten province. The company had won the parking management tender legally, yet was met with violent opposition.

Sanny Iskandar, chairman of the Indonesian Industrial Estates Association (HKI), warned that intimidation by ormas is a systemic threat. “These organizations stage protests and other actions designed to shut down access to industrial zones, preventing goods from entering or leaving and ultimately disrupting factory operations,” Iskandar said.

According to association data, regions such as Bekasi, Karawang, Batam, and parts of East Java have become hotspots for such activity. Iskandar estimates that disruptions in these zones could lead to potential losses of hundreds of trillions of rupiah annually, either from halted operations or the withdrawal of investors.

The scope of civil society groups in Indonesia is staggering. As of March 2024, the Ministry of Home Affairs recorded 554,692 registered ormas. The actual number is likely higher, as many operate without formal registration. The lack of regulatory safeguards means virtually anyone can establish an ormas, and while many serve legitimate social purposes, others have become little more than fronts for extortion and violence.

Critics say the government’s laissez-faire attitude toward these organizations has created fertile ground for abuse. Yet ormas are not the only culprits. In 2020, a high-ranking police officer at National Police Headquarters was accused of extorting Rp7 billion (US$440,000) from an herbal medicine entrepreneur in Cilacap, Central Java. The officer allegedly detained the entrepreneur on dubious charges for six days, only releasing him after the money was paid. In another 2016 case, Amran Mustari, head of the National Road Development Agency for the Maluku and North Maluku regions, was sentenced to nine years in prison for extorting construction firms in exchange for project awards. The total bribes ran into the tens of billions of rupiah. And in 2015, two officials from the Ministry of Trade were arrested for soliciting bribes from import-export businesses at Tanjung Priok port in exchange for speeding up cargo unloading. Authorities recovered US$10,000 in cash during the sting operation.

Ahmad Heri Firdaus, a researcher at the Institute for Development of Economics and Finance (INDEF), warned that such entrenched practices are severely damaging Indonesia’s appeal to foreign investors. “Security and business certainty are essential for any investor,” Firdaus said. “If the government cannot guarantee that, it’s no surprise that investors are choosing neighboring countries.”

The concern is backed by data. In the World Bank’s 2020 Ease of Doing Business (EODB) index, Indonesia ranked 73rd out of 190 countries—behind Singapore (2nd), Malaysia (12th), Thailand (21st), Brunei (66th), and Vietnam (70th). Although the EODB has since been discontinued amid concerns over data manipulation, the 2020 rankings remain a stark reminder of Indonesia’s challenges in attracting and retaining foreign capital.

Indeed, global tech giants appear to be hedging their bets. Despite Indonesia’s status as a major consumer market, companies such as NVIDIA, Apple, and Microsoft have so far avoided making the country a core part of their regional investment strategy. NVIDIA, for example, announced in early 2024 that it would establish Vietnam as a hub in its global AI supply chain. Apple, which has invested more than US$16 billion in Vietnam since 2019, is now expanding operations further. In contrast, its sole upcoming project in Indonesia—a US$1 billion AirTag manufacturing facility in Batam—only materialized after protracted negotiations over local content requirements. Microsoft, meanwhile, was slow to move into the Indonesian cloud market, only announcing plans for a data center in 2021—well after launching similar operations in Singapore.

In response to the mounting crisis, the government has launched a multi-agency task force known as the Joint Operations Task Force for Premanism and Civil Society Organization Control. Comprised of members of the military, police, and various ministries, the unit is charged with rooting out extortion and restoring investor confidence.

According to Coordinating Minister for Political, Legal, and Security Affairs Budi Gunawan, the task force was formed under direct orders from President Subianto. The task force has already launched synchronized operations across multiple regions, including in Rancaekek, Bandung Regency, where hundreds were arrested at the Kahatex industrial zone on May 11. In Jakarta alone, police arrested over 2,000 individuals, with 231 now under formal investigation for crimes including extortion, assault, and theft. Authorities have also removed flags and banners belonging to ormas from public spaces in an effort to reassert state authority.

The Indonesian National Police reported more than 3,000 extortion cases nationwide since May 1, when the task force began operations. “We will not tolerate acts of intimidation, extortion, or violence perpetrated under the guise of civil organizations,” said National Police Chief Listyo Sigit Prabowo.

Despite these efforts, Firdaus cautioned that punitive actions alone will not solve the problem. “The government needs a holistic approach,” he said. Government has to address the root causes such as slow economic growth, limited job opportunities, and increasing layoffs. As Indonesia strives to reach its ambitious target of 8 percent economic growth, these systemic challenges pose serious obstacles. Unless the country can offer a safer, more predictable environment for investors, it may continue to fall behind in a regional race increasingly dominated by more agile and responsive neighbors.