Former general Prabowo takes power in Indonesia

Former army general Prabowo Subianto has been sworn in as Indonesia’s president with ambitious plans to boost growth while asserting a greater international role for Southeast Asia’s largest economy.

Prabowo, 73, took over from Joko Widodo eight months after his landslide victory in February’s presidential election. Gibran Rakabuming Raka, the eldest son of his predecessor, will be his deputy.

The inauguration ceremony marked a remarkable transformation of the company Prabowoa feared former commander of the country’s special forces who was kicked out of the army and once banned by the US for allegedly kidnapping pro-democracy activists. Prabowo has always denied the allegations.

The former general won over millions of Indonesians with the backing of the highly popular Widodo, and by promising policy continuity and continuity. free school luncha massive program expected to cost $28 billion. He also pledged to boost economic growth to 8% per year, up from the 5% level that Indonesia has maintained for more than a decade.

But Prabowo has distinguished himself from his predecessor in every area, from government spending to foreign policy. He is willing to take on more debt to fund social assistance programs and plans to expand his cabinet by a third to attract political allies.

He also wants to Indonesia play a more active role in the international arena. Widodo stays away from international events. During his 10 years in power, he never personally attended the annual United Nations General Assembly in New York. On the other hand, Prabowo made more than a dozen international trips between election day and inauguration day.

“The most significant break in Prabowo’s policies compared to his predecessor is the focus on the country’s foreign policies,” said Kennedy Muslim, a political analyst at Indikator Politik Indonesia. . “While Jokowi single-mindedly focuses his pragmatic foreign policy on attracting business investment from abroad, Prabowo is more strategic in nature because he is essentially more interested in geopolitics more powerful than his predecessor”.

Prabowo will maintain Indonesia’s historically neutral foreign policy stance but will seek to play a larger role and increase engagement in global affairs. As defense minister in Widodo’s government, Prabowo last year proposed a demilitarized zone and a referendum at the United Nations to end the conflict between Ukraine and Russia, a plan that rejected by Ukraine. This year, Prabowo said Indonesia is ready to send peacekeeping forces to Gaza.

His first trip abroad since being elected was to China, where he met Xi Jinping. Beijing is Indonesia’s largest trading partner and second-largest source of foreign direct investment, pouring money into economically significant industries such as metals, mining and infrastructure. Prabowo also met with Russian President Vladimir Putin and the leaders of Japan, France and neighboring Southeast Asian countries.

At home, social assistance programs are a top priority. While Widodo focuses on building roads, ports and other infrastructure, Prabowo wants to ensure food and energy security, alleviate poverty, and provide free meals and health checks.

“One of his immediate priorities is to address the social aspect of his agenda,” said Maybank analyst Brian Lee. “Jokowi talks about hard infrastructure. Prabowo is looking at initiatives that target not only the national economy as a whole but also households.”

However, Prabowo will also have to attract investment to achieve its growth goals. “Eight percent would be very difficult,” Lee said. “Basically, he needs to attract more investment, both domestic and foreign direct investment.”

Prabowo takes over an economy transformed during Widodo’s 10 years in power into a central player in the global energy transition effort, thanks to Indonesia’s huge nickel reserves. However, GDP growth fell short of Widodo’s original target of 7%.

Widodo has also relaxed regulations to attract foreign investors, especially in metals and mining, attracting record capital. Although Prabowo said he would be friendly to investors, he has yet to offer a detailed plan.

One of Prabowo’s economic advisers told the Financial Times that focusing on mineral processing alone would not be enough to achieve the GDP target. “We need new growth drivers,” he said, pointing to the digital sector, the energy transition and higher-quality manufacturing as areas where growth is possible.

Financially, Prabowo is planning to be much more liberal than Widodo, mainly to fund his social assistance programs. His brother and close advisor, Hashim Djojohadadikusumo, said Prabowo increase plan The country’s debt-to-GDP ratio increased to 50% from the current 39%. To support higher debt, Prabowo hopes to increase tax revenue and sell state assets.

While Indonesia’s debt levels are lower than those of regional peers, economists warn that a sharp increase in borrowing in the short term could affect the currency, pose risks to Indonesia’s credit rating and potentially pervasive impact on the economy.

Prabowo’s team has reassured investors of its financial prudence in recent months, but concerns remain. “Potential financial strains can increase over time when [Prabowo’s] new programs are developing,” Citi’s Indonesia chief economist Helmi Arman said in a recent research note. He also expressed concern that Prabowo’s key programs seem to be aimed at the domestic market and not at exports.

Prabowo will also have to deftly handle his political allies, most importantly his old rival Widodo. Analysts say the former president has tried to maintain influence for months to protect his legacy.

“Prabowo knows that people still love Jokowi. . . however, Prabowo wants to keep power in his own hands without any interference from Jokowi,” said Arya Fernandes, a political analyst at the Jakarta-based Center for Strategic and International Studies. know and added that Widodo could be given an advisory role.

Several of Widodo’s ministers are expected to take up positions in the Prabowo government. One sign of the outgoing president’s influence could be the outsized role of his son, Gibran, as vice president, not traditionally a prominent position.

Prabowo also plans to form a larger government, expanding the cabinet from 34 to 46, adding to concerns about fiscal spending. His advisers say the larger government is mainly aimed at placating partners in the ruling coalition.

Trade-offs are inevitable, said Indikator Politik Islamist, especially “between political stability and internal cohesion, as well as the effectiveness of governance in his big-tent coalition.”