Indonesia’s New President Will Keep the World Guessing

(Bloomberg Opinion) — All signs point to a smooth transition of power in Indonesia. The next president, Prabowo Subianto, is aiming for economic and foreign policy continuity, while staying close to what his predecessor Joko Widodo did. But the strategy risks missing the opportunity to address some of the biggest problems facing Southeast Asia’s largest economy, at a time when it should have a more prominent international role. By some estimates, Indonesia supplies more than a quarter of the world’s minerals, making it an important geopolitical player in the US-China battle for influence.

Prabowo will be sworn in on October 20 after being elected in a landslide victory in February. He teamed up with Gibran Rakabuming Raka, son of Jokowi (as Widodo is more commonly known), as his vice president and won over citizens with promises of growth, jobs and a stronger Indonesia on the global stage.

To achieve these goals he needs the right people on his team. On Monday, Indonesia’s current finance minister, rockstar economist Sri Mulyani Indrawati, confirmed that she has been asked to serve in the next cabinet, though she preferred to remain cryptic when asked by reporters if she would do so. Said: “We will help as much as we can.” possible.”

The safety of Indravati will be a quick victory. This would bring credibility to the new cabinet, and reassure international investors on fiscal responsibility, allaying potential fears of Prabowo’s more nationalistic approach to running the economy. In an indication of how much influence she has on the markets, both the rupee and shares rose on reports that she was considering her invitation.

The fiery former special forces commander, who was also the son-in-law of former dictator Suharto, could have delivered with the kind of firepower that the former World Bank managing director brings. For now, he is living in Jokowi’s shadow. The outgoing president still enjoys relatively high approval ratings, despite criticism that he has turned back the clock on democratic progress. In a nation that has struggled to shake off its authoritarian past, this is a disappointment not only for citizens who hoped for a better future, but also for the international community that has been eyeing Indonesia’s leadership role in the region. Let’s trust.

There is little hope that Prabowo will improve on that trajectory, even though voters have high expectations about what kind of progress his presidency might bring. Both men have prioritized economic growth, with Prabowo setting an ambitious target of 8% expansion. Given that Jokowi did not manage to achieve his 7% target in his two terms, and amid a deteriorating global environment, it is also unclear how Prabowo will achieve it.

One way to differentiate yourself economically is to put your focus where it matters most: the future of the country. There are signs that this is already happening as their mid-day meal program is set to start from January 2, aiming to target 15 million school children. This is a positive long-term policy for a country that, while still impressive, suffers from one of the world’s highest rates of child malnutrition. Improvement.

Ending hunger is one thing – ensuring that the economy is able to provide enough jobs for young people as they graduate from school and university is quite another. The official unemployment rate is 5% and has declined recently, but for citizens aged 15–24 it stands at 13%, and many young people are struggling to find work.

Will help in attracting foreign investment through business-friendly policies. The US State Department’s 2024 Investment Climate Report states that investing in Indonesia remains challenging due to restrictive regulations, legal and regulatory uncertainty, economic nationalism, trade protectionism, and vested interests. Eliminating red tape will give the country an opportunity to compete better with regional contenders like India.

Foreign policy is another way the 72-year-old can make his mark. Prabowo is taking power at a time when geopolitical tensions have increased. The resource-rich nation is being courted by both the US and China for supplies of copper, gold, tin and bauxite. It is the world’s largest producer of nickel, a key component in electric vehicle batteries. His first trip abroad after the election was to Beijing, and then to Japan – a reminder to both China and the US that Indonesia would remain independent as it pursued its commercial and political goals.

Balancing the superpower rivals will be one of Prabowo’s biggest challenges. His strategy is to keep both sides guessing. Once banned from entry to the US over alleged human rights violations during the Suharto regime, he is now being welcomed into global capitals. He should use his new position to ensure that Indonesia punches above its weight on the international stage. Speaking out against Chinese incursions into the South China Sea, where Indonesia has claims, even though Jakarta has strong economic ties with Beijing, would be a way to emphasize the archipelago’s growing self-confidence.

Indonesia is often called a sleeping giant, a country of 270 million, constantly waiting to realize its potential. Jokowi helped the country attract world attention. Prabowo has a chance to pay it forward and make the world’s most populous Muslim-majority country a major international player. He should not lose the opportunity.

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Karishma Vaswani is a Bloomberg Opinion columnist covering the politics of Asia, with a particular focus on China. Previously, she was the BBC’s lead Asia presenter and worked for the BBC across Asia and South Asia for two decades.

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