Indonesia’s New President Will Keep the World Guessing

(Bloomberg Opinion) — All signs are pointing to a smooth transition of power in Indonesia. The next president, Prabowo Subianto, is aiming for economic and foreign policy continuity, sticking closely to the work done by his predecessor, Joko Widodo. But this strategy risks missing an opportunity to address some of the largest problems in Southeast Asia’s largest economy, at a time when it should have a more prominent international role. By some estimates, Indonesia supplies over 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 Oct. 20, after being elected in a landslide victory in February. He teamed up with Jokowi’s (as Widodo is more commonly known) son Gibran Rakabuming Raka as his vice president, winning 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 she’d been asked to serve in the next cabinet, though she chose to remain mysterious when asked by reporters whether she would, saying: “We will help as much as possible.”

Securing Indrawati would be an early victory. It 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 a sign of how much sway she has over the markets, both the rupiah and shares gained on reports that she was considering his invitation. 

The former fiery special forces commander, who was also the son-in-law of former dictator Suharto, could do with the kind of firepower that the former World Bank managing director would bring. At the moment, he’s living in Jokowi’s shadow. The outgoing president still enjoys relatively high approval ratings, despite criticism that he’s 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 to citizens who had hoped for a better future, but also to the international community who rely on Indonesia’s leadership role in the region. 

There’s little hope that Prabowo will improve that trajectory, even though there are high expectations from the electorate about what kind of progress his presidency might bring. Both men have made economic growth a priority, with Prabowo stating an ambitious target of an 8% expansion. Given Jokowi didn’t manage to achieve his 7% goal in his two terms in office, and amid a worsening global environment, it isn’t clear how Prabowo will, either.

One way he could differentiate himself economically is by putting his attention where it matters most: the nation’s future. There are signs that this is already happening with his midday meals program targeting 15 million schoolchildren set to start Jan. 2. It’s a positive long-term policy for a country that still suffers with one of the world’s highest rates of children’s malnutrition, despite impressive improvements.  

Eliminating hunger is one thing — ensuring 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 between 15-24 it is 13%, and many youths are struggling to find work. 

Attracting foreign investment through business-friendly policies would help. The US State Department’s 2024 Investment Climate report notes that investing in Indonesia remains challenging because of restrictive regulations, legal and regulatory uncertainty, economic nationalism, trade protectionism, and vested interests. Cutting red tape would allow the country to better compete with regional contenders like India. 

Foreign policy is another way the 72-year-old could make his mark. Prabowo is taking over at a time of heightened geopolitical tensions. The resource-rich nation is being courted by both the US and China for its supplies of copper, gold, tin, and bauxite. It is the world’s largest nickel producer, a key ingredient in electric vehicle batteries. His first overseas trip after the election was to Beijing, and then to Japan — a reminder to both China and the US that Indonesia will stay independent as it pursues 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 entering the US over alleged human-rights violations committed during the Suharto regime, he is now being feted in global capitals. He should use his new-found status to ensure that Indonesia punches above its weight internationally. Speaking out against Chinese incursions in the South China Sea, where Indonesia has a claim, even as Jakarta enjoys a strong economic relationship with Beijing, would be one way to assert the archipelago’s growing confidence. 

Indonesia is often called the sleeping giant, a nation of 270 million, perpetually waiting to realize its potential. Jokowi helped bring the country to the world’s attention. Prabowo has a chance to build on that and make the world’s most populous Muslim-majority country a key international player. He shouldn’t squander the opportunity. 

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Karishma Vaswani is a Bloomberg Opinion columnist covering Asia politics with a special 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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