Redefining Corruption Must Not Weaken the Law
A proposal to redefine corruption put forward by National Economic Council Chair Luhut Binsar Pandjaitan has not been approved by President Prabowo Subianto. While the stated aim is to provide legal certainty for business decisions, the government must ensure that legal reform does not narrow accountability for public assets.
The debate over redefining corruption entered a new phase after Prabowo called for a more in-depth study of Luhut’s proposal. On 26 October 2026, Coordinating Minister for Legal Affairs, Human Rights, Immigration and Corrections Yusril Ihza Mahendra stressed that the request for further study did not indicate the President’s approval of the NEC proposal.
The clarification was important after Luhut’s earlier remarks gave the impression that his idea had received the green light. The debate centres on the element of state financial loss in corruption cases, particularly when business decisions by state-owned enterprises (SOEs) result in losses. Luhut wants legal certainty so that decision-makers do not automatically face the threat of criminal prosecution simply because an investment fails.
Law Minister Supratman Andi Agtas said the proposal was still at the discussion stage and had not entered formal deliberations on revising the law. The government has therefore not set a direction for any changes. The scope for review remains open, including whether the law needs clarification, expansion or strengthening in areas where it has not effectively addressed corrupt practices.
Business risks
Not every loss incurred by an SOE constitutes corruption. Investment carries risks, even when decisions are made following feasibility studies and professional calculations. Market shifts, economic turmoil and unforeseeable circumstances can cause decisions that were rational at the time to fail.
Punishing directors solely because their business decisions produced poor results could encourage excessively defensive decision-making. Company managers might avoid risks to protect themselves, even when an investment opportunity could benefit the state.
However, business losses must not be used as a reason to halt scrutiny. A decision that appears professional may conceal conflicts of interest, price manipulation, procedural breaches or benefits to particular parties. A loss-making investment does not automatically prove corruption, but describing it as a business risk does not rule out the possibility of a criminal offence.
Likewise, protection for good-faith business decisions deserves discussion under clear criteria. Assessments should consider the information available when a decision was made, the adequacy of the analysis, compliance with procedures, transparency and the existence of any conflicts of interest. Investigations must not rely solely on the final outcome, but neither should they stop at formal documents that could be manipulated.
The boundaries of state assets
The next issue concerns the definition of state finances. Yusril said the status of state assets separated to establish SOEs needs to be clarified, including the assets of their subsidiaries. Unclear boundaries can trigger legal disputes when corporate losses are pursued as corruption cases.
Legal certainty is necessary. However, clarity about the status of assets must not become a loophole that leaves public wealth unprotected once it enters a corporate structure. A legal corporate form and business mechanisms do not remove the obligation to safeguard assets derived from the public interest.
The government must therefore weigh both interests. Directors should be protected from criminalisation for legitimate decisions, while law enforcement agencies must remain able to investigate suspected manipulation, abuse of authority and conflicts of interest. The boundary between the two must be set out in testable legal provisions, rather than depending on who is under investigation.
Prabowo must also ensure that the review does not focus solely on protecting SOE decision-makers. Yusril said the discussions also cover aligning national law with the United Nations Convention against Corruption (UNCAC). The convention is not limited to bribery, but covers various forms of corruption that should be considered in updating national law.
This means reform should create scope to strengthen enforcement against trading in influence, private-sector bribery and other forms of corruption that are not yet adequately regulated. If attention is concentrated too heavily on shielding directors from cases involving state financial losses, the reform agenda risks losing its balance.
Public scrutiny
The government should also explain openly which parts of the Corruption Eradication Law it considers problematic, what evidence supports that assessment and how any changes would affect law enforcement. The review should involve the Corruption Eradication Commission (KPK), state auditors, academics, businesses and civil society.
Transparency matters because changing the definition of corruption is not a technical issue concerning only relations between the government and SOE managers. The rules determine the limits of accountability for public wealth. Poorly drafted exemptions could make problematic business decisions harder to investigate, while provisions that are too broad could lead to the punishment of legitimate decisions.
Prabowo has not approved the NEC proposal. His decision to request a more in-depth study gives the government an opportunity to avoid rushed changes. That opportunity should be used to clarify the law and close gaps in accountability, rather than simply easing the concerns of officials and directors.
Legal certainty and the fight against corruption are not competing interests that must cancel each other out. The state needs to protect business decisions made honestly and professionally, while also ensuring that every suspected abuse of power can be investigated independently.