1. Introduction
Indonesia is the fourth most populous country in the world and the largest in the ASEAN region. Its growing economy has made it an attractive area for investment to many Japanese companies.
However, the 2024 edition of the Corruption Perceptions Index (published annually by Transparency International), which is a representative indicator of the degree of corruption around the world, ranks Indonesia 99th out of 180 countries, which means the risk of bribery in Indonesia is relatively high.
Indonesia has strict laws and legal systems to regulate bribery, which we will discuss in the following sections, but the country still struggles to address bribery and corruption.
2. Anti-Bribery Framework in Indonesia
The main laws that regulate bribery in Indonesia are Law No. 31 of 1999 on the Eradication of the Criminal Act of Corruption, as amended by Law No. 20 of 2001 (collectively, the "Corruption Eradication Act") and Law No. 11 of 1980 on the Criminal Act of Bribery ("Anti-Bribery Act"). The Anti-Bribery Act remains in effect, but enforcement actions by the authorities are based primarily on the Corruption Eradication Act.
Article 5, Paragraph 1, and Article 13, of the Corruption Eradication Act prohibits the following acts, which are deemed bribery of public officials:
- Providing or promising benefits to a public servant (civil servant or state administrator) for purposes of causing him or her to perform or not to perform certain acts, in violation of his or her duties, on the basis of his or her official position.
- Providing anything to a public official, whether or not based on his or her official position, on the grounds of or in connection with any act or omission that would constitute a breach of duty.
- When a gift or promise is made for purposes of causing a public official to abuse his or her official authority or position, or when the provider is deemed to have an interest in the authority or position of a public official by giving a gift or making a promise.
Please note that the primary focus of Article 5 is the corrupt offering of a gift (or gratification) related to a specific action or lack of action by the recipient, in contravention of the recipient’s obligations or duty.
Definition of public official
The Indonesian Corruption Eradication Act and Anti-Bribery Act have a fairly broad definition of “public official,” which includes employees and officers of corporations financed by or using the facilities of the state or the public. Even a person who is not on the government payroll may be deemed a civil servant under the law if he or she is employed by a corporation that is financed by the state (specifically, the Republic of Indonesia or a region within the Republic of Indonesia). State administrative officials who carry out executive, legislative and judicial functions (for example, members of the House of Representatives judges, and head of a state university) also fall within the definition of public official for purposes of the Anti-Corruption Law.
Definition of Benefits
The Indonesian Corruption Eradication Act classifies hospitality expenses, such as gifts, travel, meals, and entertainment as “gratification.” Under the Indonesian Corruption Eradication Act, every form and incidence of gratification given to a public official is potentially a bribe, but to be an actionable crime it must be given in a manner that bears some connection to the public official’s position and must involve a favor or advantage granted to or expected by the giver in return for the gratification--specifically, an expectation that the recipient will do or not do something in contravention of the recipient’s obligations or duties.
The Corruption Eradication Act establishes no minimum threshold amount below which gratification does not constitute bribery. However, KPK Circular Letter No. B1341/01-13/03/2017 On Guidelines and Limitations of Gratuities, etc., (“Gratuities Circular Letter”) lists gifts to public officials that are not necessarily considered bribery, such as the provision of cash or gifts on the occasion of weddings, birthday celebrations, baptisms, circumcisions, and other traditional or religious ceremonies. The Gratuities Circular Letter lists a maximum amount of IDR 1 million for each event. Ministries and agencies have issued similar guidelines for their civil servants. While the Gratuities Circular Letter and other guidelines cannot be treated as a safe harbor for evaluating potential bribery, they may be helpful for considering acceptable levels of social courtesy.
Public officials who receive benefits are required to report the financial value of the items received to the KPK within 30 business days from the date of receipt (Corruption Eradication Act, Article 12C); these reports can serve as a first line of defense in the KPK's efforts to detect bribery.
Facilitation payments
There are no exceptions for facilitation payments, which qualify as gratification under the Indonesian Corruption Eradication Act.
Article 12 B of the Indonesian Corruption Eradication Act establishes thresholds for determining who bears the burden of proving whether or not gratification is a bribe:
- For amounts of IDR 10 million and above, the burden to prove gratification is not bribery lies with the recipient.
- For amounts below IDR 10 million, the burden to prove gratification is not bribery lies with the prosecutor.
Commercial Bribery (Private to Private)
With regard to bribery between officers and employees of private companies, the Corruption Eradication Act prohibits acts that would profit persons, including private individuals and corporations, who are in a position to harm the nation's finances or economy (Corruption Eradication Act, Article 2). Article 2 of the Anti-Bribery Act also prohibits the provision of benefits to persons who are obligated to act in the public interest. These provisions prohibit bribery of officers and employees of private companies that may relate to the finances, economy, or public interests of the state.
However, in other situations, the Indonesian legal system does not specifically regulate bribery in the private sector. The issue is whether or not bribery of officers and employees of a private company constitutes a criminal act (for example, embezzlement) under the Criminal Code or a fraudulent act prohibited under Article 378 of the Indonesian Civil Code (“ICC”).
Penalties
Individuals who commit bribery in violation of Article 5, Paragraph 1 of the Corruption Eradication Act are subject to a fine of up to IDR 150 million and/or imprisonment for up to three years (Corruption Eradication Act, Article 5). In addition, individuals who commit bribery in violation of Article 13 of the Corruption Eradication Act are subject to fines ranging from IDR 50 million to IDR 2.5 billion and/or imprisonment for a period of one to five years (Corruption Eradication Act, Article 13).
If a corrupt act is committed by a corporation (meaning within the scope of the corporate entity’s business, based on an employment contract or other relationship) or on behalf of a corporation, the corporation and its management also are subject to the aforementioned penalties (in the case of a corporation, only the fine applies, but it may be increased by up to an additional one-third of the amounts referenced above) (Corruption Eradication Act, Article 20).
3. Authorities responsible for prosecuting corruption and combatting bribery in Indonesia
Bribery is a serious impediment to Indonesia's development, and fighting bribery is a major priority of the reform era. In 2002, the Government of Indonesia established the Corruption Eradication Commission (KPK), which has authority to investigate and prosecute corruption.
Each of the three agencies with authority to investigate bribery and corruption, the KPK, the police, and the Attorney General (collectively, the “Authorities”), have equal standing and jurisdiction under the law.
Any of the Authorities that has sufficient preliminary evidence to commence an investigation may do so; however, this results in overlapping authority, which may weaken the law enforcement process in bribery and corruption cases to a certain extent, because each of the Authorities may have a different perspective on a given case, even though all three of the Authorities have equal standing to investigate corruption. The Corruption Eradication Act states that the KPK generally is the relevant investigative authority where corruption:
- Involves the state legal enforcement apparatus, state organizers, and others involved in the enforcement of criminal corruption
- Causes societal concern
- Involves a minimum state loss of IDR1 billion
The Government of the Republic of Indonesia also: (a) has incorporated civil society and non-governmental organizations (NGOs) into the reform process, to create multiple networks of anti-corruption actors, and (b) reformed key regulatory frameworks, such as business and public procurement regulations. Nonetheless, corruption remains a serious problem and overall progress has been slow.
One reason for the moderate pace of reform is the deeply embedded institutional culture of patronage. Often, Indonesian authorities do not view bribery as a corrupt practice.
A second challenge to fighting bribery is that Indonesia's oversight mechanisms lack sufficient resources. Many regulatory agencies lack the capacity and skills to deal with complex bribery cases and abuses of public funds; in particular, they are weak in terms of investigation, surveillance, and interview techniques.
Further compounding reform efforts are weak communication and coordination among key institutions, such as the Attorney General's Office (AGO), the Indonesian National Police, and the KPK.
As recently as March 2025, executives of a subsidiary of PT Pertamina, a large scale state-owned oil and natural gas corporation, were arrested for alleged corruption relating to the company’s procurement of crude oil and fuel during the period from 2018 to 2023, which resulted in State losses of approximately Rp 193.7 trillion (U.S. $12.5 billion).
4. Conclusion
Bribery is strictly prohibited in Indonesia. If a person associated with a corporation commits bribery, the law also holds the corporation and its management liable. However, corruption remains a serious social problem, for multiple reasons.
Companies doing business in Indonesia often face difficult practical issues, for example, if it appears permits or licenses cannot be obtained without providing benefits to relevant public officials. Even in these situations, it is vital to understand the legal risks of committing bribery, and to respond properly to avoid serious consequences for both the company and the relevant individuals.
