RISKS FOR INDONESIA
Indonesia already possesses regulatory tools to protect social welfare in the digital economy: competition law, labour standards, consumer protections and digital platform oversight. Where enforcement proves inadequate, the solution is to strengthen institutions and modernise regulations, not to bypass established frameworks through a golden share that injects political discretion into technical decisions about pricing and service standards.
The precedent is dangerous. If adopted, this model would encourage opaque politicised arrangements across sectors, discouraging the long-term investment that depends on transparent rules. It pushes Danantara beyond managing state-owned enterprises into wielding disproportionate control over private companies. This creates precisely the uncertainty investors want to avoid.
A golden share risks swapping the predictability of markets and regulation for political discretion. It is a gamble in which government owns the downside. The government will be implicated if the consolidated firm proves overly dominant and predatory towards its captured market, including consumers, driver-partners and merchant-partners as well as smaller competitors or new entrants.
Conversely, directly intervening in corporate decisions to protect social welfare will risk damaging the firm’s commercial performance.
Indonesia has the potential to lead in the digital economy, given its large population and growing digital infrastructure. Yet this requires getting the fundamentals right: careful regulation, not ad-hoc state intervention.
Hilman Palaon is a Research Fellow at the Lowy Institute in the Indo-Pacific Development Centre. De Rizky Kurniawan is a public policy and regulatory professional with experience in shaping Indonesia’s digital economy and education reform. This commentary first appeared on Lowy Institute’s blog, The Interpreter.
Source: CNA
