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The jailing of one of Indonesia’s most prominent businessmen on a serious corruption charge has sparked fears that businesses will become dependent on the Southeast Asian economy.
Nadiem Makarim, co-founder of the popular Gojek app, was last month he was sentenced to 10 years in prison considering him to have misused his position when he was the minister of education in the country.
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Makarim was found guilty of providing favorable treatment to Google, which invested in Gojek, by purchasing Chromebook laptops for school children during the COVID-19 pandemic.
Critics say Makarim, who was education minister under former Indonesian President Joko Widodo from 2019 to 2024, cost the government $120m, saying he should have known the laptops would not work in remote areas without internet.
Prosecutors say the case against Makarim is unsubstantiated and that the political founder is the latest in a campaign of political revenge being carried out by the administration of Indonesian President Prabowo Subianto.
Nicky Fahrizal, a political and social change researcher at the Center for Strategic and International Studies (CSIS) in Jakarta, said foreign investors will think twice before investing in Indonesia following the decision.
“Nadiem’s case, as well as several similar cases, has served as a warning to investors,” Fahrizal told Al Jazeera.
“For them, non-economic factors, such as legal certainty and the quality of the courts, are more important.”
Makarim was found guilty by a five-judge panel on June 30, following charges related to the purchase of more than 1 million laptops for use in remote and impoverished schools.
In a trial at Indonesia’s Corruption Court in Jakarta, prosecutors said Makarim deliberately made his bid to favor Google, which provided money to Aplikasi Karya Anak Bangsa (AKAB), Gojek’s parent company.
Scrutiny of the charity’s policy was sparked in the public after it emerged that Chromebooks often did not work in remote areas, raising questions about how Google was chosen in the first place.
“Choosing a device that relies on the Internet among incompatible devices… shows a lack of compatibility with needs…” Judge Sunoto said in handing down the decision.
After the decision, the prosecutor Corneles Geeb Paulus hailed the result as a victory for “students whose rights were taken away and deprived of access to digital education throughout Indonesia”.
Google has refused to offer or give officials any chance to win the tender.
The California-based technology giant, which has a market value of more than $4 trillion, was not charged in the case.
“In terms of the law, authorities seem to be hitting a wall when it comes to finding enough evidence and establishing the necessary relationships to prosecute the agency,” CSIS’s Fahrizal said.
“In terms of politics, Google is a technology giant with corporate power.”
Taking action against Google would jeopardize the government’s digitalization efforts, Fahrizal added, saying the company is “too big to fail” within the digital sector.
Trissia Wijaya, an Indonesian-born researcher at the University of Melbourne’s Asia Institute, said Nadiem’s opposition, along with uncertainty about the business environment under Prabowo, could undermine market confidence.
“Regardless of whether Nadiem is really guilty or not, he is a sign of the beginning and hope of the market in Indonesia, especially in the mid-2010s,” Wijaya told Al Jazeera.
“When Gojek started to rise and attract attention, Indonesia was one of the countries that wanted international investment, from the US and China, to invest in fintech companies,” added Wijaya, explaining that Indonesia’s business is “in a difficult time.”
Since taking office in 2024, Prabowo has been criticized for his financial performance, including his spending on public goods, such as his free lunch program, which is expected to cost around $15bn this year.
In June, the Indonesian rupiah depreciated sharply against the US dollar, some Nadir economists say, due to investor skepticism about Prabowo’s finances.
For his part, Prabowo has denied that he is anti-business, stressing that Indonesia must follow the law.
“Some said that I don’t like foreign businessmen and I will drive them out, but that is not the case. I have met many people who are planning to enter the market,” Prabowo told a meeting of young businessmen in the city of Lampung last month.
“The government must establish a good environment for entrepreneurs, including the enforcement of the law. If the law is not followed, what is followed is the law of the jungle… laws based on power, and in the end, that is not good for any of us.”
The ‘reliability’ of government policies
Siwage Dharma Negara, coordinator of the Indonesian studies program at the ISEAS-Yusof Ishak Institute in Singapore, said Indonesia’s reputation as an investment destination had already declined before Makarim’s decision.
“Sellers don’t know about the reliability of government policies, and they don’t know about the reliability of institutions, whether it’s the authorities, the law, or the judiciary in Indonesia,” Negara told Al Jazeera.
“The story of Nadiem is only one that has undermined the confidence of foreign traders. But there are many other factors that contribute to it, including the government’s policies that are significantly reducing trade.”
Teguh Yudo Wicaksono, an Economics lecturer at the Universitas Islam Indonesia in Yogyakarta, said that although he does not expect the case to have a major impact on foreign investment, it may prevent Indonesian talent from abroad to return home.
“This could lead to brain drain and Indonesia losing talent,” Wicaksono told Al Jazeera.
Makarim attended Harvard Business School and Brown University in the United States before returning to Indonesia in 2006 and co-founding Gojek four years later.
In 2019, Gojek, which started as a ride-hailing business before transforming into a high-end app that also offers food and digital payment services, became the first Indonesian technology company to reach a valuation of more than $10bn.
Not everyone sees Makarim’s story as negative for investors.
I Gusti Ngurah Bayu Pradana, a commercial law expert at the Bali-based Malekat Hukum International Law Firm, said that enforcement of corruption laws should be seen as “a positive sign of legal certainty and governance behavior in the country, not a bad one”.
“Experts in foreign investment understand that the biggest risk in investing is not in the presence of law enforcement, but in legal uncertainty, or in the way the rules of the game are unclear, the legal process is missing in the open, or is enforced selectively and unpredictably,” Pradana told Al Jazeera.
Although Makarim was found guilty of abuse of power and subverting the government, he was acquitted of another charge of direct enrichment, and was given a sentence less than the 18 years that the prosecutor wanted.
When reading the decision, Judge Andi Saputra also gave a dissenting opinion, saying that he “did not find evidence of bad or bad intentions” and “a connection or indication between the conflict of interest and corporate crimes”.
Malekat Hukum law firm Pradana said that the judge disagreed with the evidence that Indonesian courts are independent and investigative.
“For foreign investors to consider Indonesia as an investment destination, the takeaway in this case should not be alarm, but rather with confidence that Indonesia’s legal system works and can respond to everyone equally before the law,” Pradana said.
“As long as financial agreements are clearly written, transactions are conducted transparently, and implementation complies with applicable laws and regulations, investing in Indonesia is a safe and reliable choice.”
