Indonesia Passes New Central Bank Law, Raising Investor Concerns Over Policy Independence

Indonesia’s parliament has approved a sweeping new law that expands the role of Bank Indonesia in supporting economic growth while granting lawmakers greater authority to evaluate the country’s independent financial regulators and central bank. The legislation was passed by acclamation on Thursday, receiving support from all political parties during a plenary session led by Deputy Speaker Sufmi Dasco Ahmad.

Although the full text of the bill has not yet been released publicly, the measure has sparked concerns among investors and market participants. Critics fear the law could increase political influence over Bank Indonesia, potentially weakening its independence as President Prabowo Subianto pushes forward with an ambitious economic agenda aimed at achieving 8% annual growth during his presidency.

Finance Minister Purbaya Yudhi Sadewa told parliament’s finance commission that the revised legislation would expand existing requirements for the central bank. Under the new framework, Bank Indonesia will be expected to implement policies that help create a favorable environment for real-sector growth, investment, and job creation.

The bill’s passage was widely expected given the strong political backing enjoyed by President Prabowo’s coalition, which controls more than 80% of parliamentary seats. Even the largest party outside the governing alliance has stated that it does not consider itself part of the opposition.

The legislative change comes at a challenging time for Indonesia’s economy and financial markets. International credit rating agencies Moody’s and Fitch recently downgraded Indonesia’s credit outlook from stable to negative, citing concerns about policy credibility and predictability.

Investor sentiment has also weakened significantly. The Indonesian rupiah has fallen more than 7% against the U.S. dollar in 2026, making it one of the worst-performing emerging-market currencies in Asia. On Thursday, the currency reached a record low of 18,045 rupiah per dollar. Meanwhile, the Jakarta Composite Index (JKSE) has declined by more than 30% since the start of the year.

While promoting sustainable economic growth has long been part of Bank Indonesia’s mandate alongside maintaining price stability and exchange-rate stability, analysts will be closely watching how the new law affects the balance between economic growth objectives and central bank independence.