{"id":8472,"date":"2025-11-05T15:43:08","date_gmt":"2025-11-05T15:43:08","guid":{"rendered":"https:\/\/aiccusa.org\/?p=8472"},"modified":"2026-04-08T17:36:05","modified_gmt":"2026-04-08T17:36:05","slug":"continuity-state-activism-multilateral-engagement-prabowos-first-year-2","status":"publish","type":"post","link":"https:\/\/aiccusa.org\/?p=8472","title":{"rendered":"Continuity, State Activism, Multilateral Engagement: Prabowo\u2019s First Year"},"content":{"rendered":"\n\n\n\n\n
<\/td>\n<\/tr>\n
Commentary by Wayne Forrest<\/em>\u200b\u200b\u200b\u200b\u200b\u200b\u200b<\/td>\n<\/tr>\n
President Prabowo\u2019s first year in office has been characterized by a combination of continuity, state activism and multilateral engagement. Upon assuming the presidency in October 2024, Prabowo kept many key ministers from President Jokowi\u2019s Cabinet, including Finance Minister Sri Mulyani, Coordinating Economic Minister Airlangga Hartarto, Mining and Energy Minister Bahlil Lahadalia, Industry Minister Agus Kartasasmita, SOE (state-owned enterprises) Minister Erik Thohir, Agriculture Minister Andi Sulaiman. 17 Ministers were holdovers, some with different portfolios. Prabowo fulfilled his obligation to his predecessor, whose support allowed him to achieve an overwhelming victory in a 3-way race. He solidified the victory by building a solid coalition in Parliament, controlling 80% of the votes.Following a series of violent protests at the end of August, Prabowo made significant changes to his Cabinet; 5 have left it. The most significant change was the replacement of Sri Mulyani, who had served 3 Presidents over 14 years, with Purbaya Sadewa, a trusted confidante of Luhut Pandjaitan, formerly a highly influential senior minister in Jokowi\u2019s government. Purbaya has stated his interest to freeze taxes for 2026, lower property taxes, and increase central government transfers to the regions. His changes are modest so far, reflecting his respect for his predecessor\u2019s efforts but also his intention to spark growth through more government spending. He has already signaled a break with some of his predecessor\u2019s policies by expressing disdain for IMF forecasts and monitoring (he considers their growth projections too low). He shifted $200 billion from government coffers to state banks to promote growth by increasing lending. Purbaya seems impatient to wait for equity finance from foreign investment. Unlike Sri Mulyani, Purbaya believes Prabowo\u2019s goal of 8% growth is achievable in the short term whereas she sees a longer route to the goal through investment, labor productivity and education reforms.<\/p>\n

Earlier this year Prabowo signaled that he would continue the state-driven, interventionist policies of his predecessor. He has continued previous policies to mandate \u201cdownstreaming\u201d of commodities through export bans. Like Jokowi he uses state spending to create demand, and relies on state-owned enterprises to deliver infrastructure, energy, and strategic investments. Whereas Jokowi built new \u201chardware\u201d (toll roads, airports, and a new capital), Prabowo is prioritizing new government-owned \u201csoftware\u201d initiatives\u201d. He is rolling out a massive free meals program designed to provide better nutrition to 85 million mothers and youngsters. His administration is in the process of creating 80,000 new \u201cRed and White\u201d village-owned cooperatives that will supply necessities; absorb local farm, fish and micro-enterprise production; create cooperative \u201csupermarkets\u201d; and promote energy independence by introducing solar power in every village.<\/p>\n

Prabowo also has new directions for Indonesia\u2019s military, harkening back to the New Order years when it was very involved in local affairs (including local engineering projects). The military\u2019s role beyond security now includes food security, pharmaceuticals, and social programs. A new role allows active duty officers to hold civilian government positions in law enforcement. Combined with the village cooperative intiative, the central government is clearly reasserting itself at the local level.<\/p>\n

Perhaps the biggest, most dramatic example of Prabowo\u2019s state interventionism is the creation of Danantara, a combination of a holding company for SOE\u2019s and investment fund. Funded by 30% cuts to the state budget, the dividends of profitable SOE\u2019s (primarily banks and mining companies), and whatever offshore funds it can attract, Danatara\u2019s mission is to optimize the management of Indonesia\u2019s state assets (especially SOEs) and channel their returns into strategic, high-impact development projects to accelerate national economic growth and welfare. It is positioning itself to be a partner for private sector investment (foreign and domestic) and endeavors to attract professional managers who can create the high level or transparency and trust associated with the best global sovereign wealth funds. Danantara recently successfully issued $3 billion of Patriot Bonds to patriotic-minded conglomerates(for waste-to-energy projects) at below market rates.<\/p>\n

As active has Prabowo\u2019s has been to use the levers of government to push Indonesia\u2019s growth to 8%, he has personally taken the reigns of foreign policy, relying less on the Foreign Ministry, unlike his predecessor. He has made many trips to important trading partners (US, China, Russia, Singapore, Malaysia, UK, France, EU), many of them state visits, as well as multilateral forums (G20, APEC, UN). In September 2025 Prabowo addressed the General Assembly (speaking third). It was the first visit of an Indonesian president to the UN in 13 years. He then flew to Canada to sign a bilateral trade deal and to the Netherlands to meet the King and Queen, as well as visit the graves of his grandparents. He sent his economics minister to finalize a long overdue free trade agreement with the EU. This year has seen Prabowo add an \u201cI\u201d to BRIICS and stand in between Vladimir Putin and Xi Jinping for a picture at a summit in China. In line with Jokowi, Prabowo pragmatically pursues Chinese investment but is more comfortable than he was with their involvement in \u201cbig ticket\u201d projects such as renewable energy and a giant sea wall for Jakarta. In a break form the past, Prabowo has a more ambiguous stance on China\u2019s claims in the North Natuna Sea, agreeing to \u201cjoint maritime development\u201d in areas of overlapping claims.<\/p>\n

One year into his Presidency, Prabowo has increased the activism of the State domestically and internationally, somewhat in line with his predecessor but also striking out in new directions. The domestic pro-growth agenda looks for new sources of capital wherever it can find it, perhaps with less guardrails. Internationally, Prabowo clearly has renewed Indonesia\u2019s support for and leadership in multilateral forums. If we cast this activity in light of American high tariff protectionism we see Indonesia, adroitly hedging its bets, opening new markets, and creating new policies and partnerships. We\u2019ll examine the risks in future commentaries.<\/p>\n

\u200b\u200b\u200b\u200b\u200b\u200b\u200b(The views represented\u00a0are the writer\u2019s own and are not necessarily shared by members of the American Indonesian Chamber of Commerce)<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Commentary by Wayne Forrest\u200b\u200b\u200b\u200b\u200b\u200b\u200b President Prabowo\u2019s first year in office has been characterized by a combination of continuity, state activism and multilateral engagement. Upon assuming the presidency in October 2024, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"elementor_theme","format":"standard","meta":{"footnotes":""},"categories":[130,7,131,11,104,25,27,5,100],"tags":[],"class_list":["post-8472","post","type-post","status-publish","format-standard","hentry","category-airlangga-hartarto","category-american-indonesian-chamber-of-commerce","category-danantara","category-indonesia","category-industrial-policy","category-outlook-indonesia","category-prabowo","category-protectionism","category-state-owned-enterprises"],"_links":{"self":[{"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/posts\/8472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/aiccusa.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8472"}],"version-history":[{"count":2,"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/posts\/8472\/revisions"}],"predecessor-version":[{"id":9203,"href":"https:\/\/aiccusa.org\/index.php?rest_route=\/wp\/v2\/posts\/8472\/revisions\/9203"}],"wp:attachment":[{"href":"https:\/\/aiccusa.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aiccusa.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aiccusa.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}