Jakarta. Businesses across Indonesia continue to face intimidation and extortion by criminal groups posing as civic organizations, discouraging investors and disrupting industries, business leaders say.

These groups, commonly referred to as ormas, have plagued the country’s business climate for years. Despite widespread complaints, authorities have yet to take concrete action to eliminate the problem. Weak law enforcement and alleged protection from rogue officials have allowed them to operate with impunity.

“What we need is legal certainty and a stable business environment so that production activities remain uninterrupted,” said Edi Rivai, Legal and External Affairs Director at Chandra Asri Petrochemical, during a discussion on Sunday.

Edi acknowledged that these groups frequently disrupt industrial operations and warned that continued inaction could further damage Indonesia’s investment climate.

Businesses Struggling with Organized Extortion

Sahat Sinaga, Executive Director of the Indonesian Vegetable Oil Industry Association (GIMNI), said cooking oil factories have been frequent targets of extortion under the guise of community contributions.

“Over time, businesses have come to accept it as a normal cost, treating it like corporate social responsibility (CSR),” he said.

These groups also demand payments from companies for various activities, such as funding their anniversaries. Many businesses comply rather than risk disruptions.

Ning Wahyu, Chairman of the Indonesian Employers Association (Apindo) in West Java, outlined several coercive tactics used by these groups, including forced payments, interference in employee hiring with illegal fees, mandatory procurement from specific suppliers, and exclusive catering contracts.

“They even impose security fees on logistics vehicles entering industrial areas and sometimes block access to business sites,” she said.

Ning attributed their unchecked growth to weak law enforcement.

“The lack of firm legal action is worsening the business climate and could further erode investor confidence,” she added, urging the government to protect businesses.

Rising Costs and Investment Losses

Bob Azam, Head of Employment at Apindo, warned that extortion increases operational costs, including energy prices and logistics expenses.

“This issue must be addressed immediately,” he said during a televised business forum.

Indonesia’s high incremental capital output ratio (ICOR) reflects inefficiency in investments, with costs exceeding those of regional competitors. Indonesia’s ICOR is above six, compared to Malaysia’s 4.9 and Singapore’s two, indicating excessive spending, including payments to criminal groups.

The Indonesian Industrial Estate Association (HKI) estimates the country has lost hundreds of trillions of rupiah in potential investments due to instability caused by these groups. They frequently disrupt industrial operations by staging protests, blocking access, and seeking control over key business activities such as transportation, catering, and procurement.

“The losses are not just from investors pulling out but also from those who never entered the market in the first place. The total could reach hundreds of trillions of rupiah,” HKI Chairman Sanny Iskandar said, as quoted by state news agency Antara.

According to Sanny, the most affected areas include Bekasi and Karawang in West Java, industrial zones in East Java, and Batam in the Riau Islands.

Some foreign investors have reportedly sent letters to President Prabowo Subianto, urging the government to take firm action. Many are instead choosing neighboring countries such as Vietnam and Malaysia due to Indonesia’s complex licensing processes and high unofficial costs.

Police Pledge Action Against Criminal Groups

The Indonesian National Police (Polri) has pledged to take firm action against ormas engaged in extortion and intimidation that disrupt the country’s investment climate. The move aims to protect businesses from illegal levies and security threats.

“Polri will not tolerate any form of gangsterism that threatens investment and national economic stability,” said Trunoyudo Wisnu Andiko, head of the Public Information Bureau at the National Police, on Saturday.

Trunoyudo said the National Police is committed to preventing groups from exploiting the ormas label to carry out extortion, impose illegal fees, or engage in activities that harm businesses and hinder investments.

Reports of ormas-related disturbances can be filed through the National Police’s emergency service at 110.

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