Latest news with #post-Suharto
Sydney Morning Herald
12-05-2025
- Business
- Sydney Morning Herald
Albanese set to land in a changed and changing Indonesia
Another target is funding for schools and universities, and this galvanised the first Dark Indonesia protests in February. The student-led movement claims that Prabowo is using the pretext of austerity to suffocate higher education. Their suspicions only grew when the president tried to allow granting of coal and mineral mining royalty rights to universities. Dark Indonesia – Indonesia Gelap – claimed that this was intended to subvert university independence and undercut climate-related research. The protesters' No.1 demand is that the austerity program be revoked. Prabowo's decision to widen the scope of the military's involvement in civilian affairs has aroused deep fears. One of his first acts was to dress his cabinet ministers in combat fatigues and lead them on a three-day military boot camp. More seriously, Prabowo has allowed serving members of the military to occupy senior government jobs, breaking through one of the guardrails designed to stop backsliding towards the military dictatorship of the Suharto years. The concern in Indonesia today is that Prabowo might be seeking to reverse-engineer a military takeover of the government. 'Don't give a blank check where soldiers could be placed at any posts. It will ruin the system,' a retired general who helped shape the post-Suharto system, Agus Widjojo, told Reuters. ANU professor emeritus Greg Fealy says that the concerns of Dark Indonesia are sincerely held: 'There is genuine substance to the critique that he's increasing the role of the military in public life. The risk is overstated, but it's heading in the wrong direction for democratic Indonesia.' Loading And prospects for Golden Indonesia? 'It's looking far less in prospect for Prabowo, not because of things he's done but because of things that have happened,' says Fealy. 'The Trump tariffs could hit Indonesia quite hard directly, and also indirectly because they will hit China, which is Indonesia's main trading economic relationship.' Trump has announced a 42 per cent total tariff on Indonesian imports to the US, although 32 of those 42 percentage points are suspended while being reviewed. Prabowo's predecessor, Joko Widodo, promised annual economic growth of 6 per cent but rarely got above 5, so Prabowo's growth target is heroic: 'It would take a whole lot of things to align favourably to hit 8 per cent,' says Fealy, 'but he's doing everything he can to achieve it and to claw in foreign investment and increase exports.' This brings us to Albanese's visit. 'More than anything else Prabowo will want to talk to Albanese about, he will want to talk trade and investment,' Fealy says. So it's no coincidence that Albanese has exactly these topics on his list for his summit with Prabowo. Australia and Indonesia already have a free trade agreement. But Albanese sees scope for much more trade liberalisation with Jakarta. Now that the US has erected a tariff wall around itself, the nations that make up the other 85 per cent of the global economy are busily talking to each other about new trade arrangements. Albanese also intends to discuss the prospects for the Sun Cable project to deliver renewable power to Indonesia. The $30 billion project will collect solar energy from northern Australia and run it through an undersea cable to Singapore. But it must transit Indonesian waters, and there could be scope for some of its electricity to be sold to Jakarta in an offtake. The director of the Lowy Institute's South-East Asia program, Susannah Patton, dismisses an Australian commentary that the Albanese visit was 'symbolic diplomacy'. Loading 'It's hugely important,' she says. 'Prabowo has centralised a lot of power' in the Istana presidential palace. Australian ministers previously had good access in Jakarta through Indonesian foreign affairs ministers and defence ministers. But Patton points out that there is only one avenue to power that counts today. With China and Russia both seeking more influence over Indonesia while the US metes out hostile trade treatment, the Australian connection to Jakarta is more vital than ever: 'Albanese needs to find a way of establishing strategic dialogue, talking regularly with Prabowo by phone; it's the only way we are able to have any influence.'
The Age
12-05-2025
- Business
- The Age
Albanese set to land in a changed and changing Indonesia
Another target is funding for schools and universities, and this galvanised the first Dark Indonesia protests in February. The student-led movement claims that Prabowo is using the pretext of austerity to suffocate higher education. Their suspicions only grew when the president tried to allow granting of coal and mineral mining royalty rights to universities. Dark Indonesia – Indonesia Gelap – claimed that this was intended to subvert university independence and undercut climate-related research. The protesters' No.1 demand is that the austerity program be revoked. Prabowo's decision to widen the scope of the military's involvement in civilian affairs has aroused deep fears. One of his first acts was to dress his cabinet ministers in combat fatigues and lead them on a three-day military boot camp. More seriously, Prabowo has allowed serving members of the military to occupy senior government jobs, breaking through one of the guardrails designed to stop backsliding towards the military dictatorship of the Suharto years. The concern in Indonesia today is that Prabowo might be seeking to reverse-engineer a military takeover of the government. 'Don't give a blank check where soldiers could be placed at any posts. It will ruin the system,' a retired general who helped shape the post-Suharto system, Agus Widjojo, told Reuters. ANU professor emeritus Greg Fealy says that the concerns of Dark Indonesia are sincerely held: 'There is genuine substance to the critique that he's increasing the role of the military in public life. The risk is overstated, but it's heading in the wrong direction for democratic Indonesia.' Loading And prospects for Golden Indonesia? 'It's looking far less in prospect for Prabowo, not because of things he's done but because of things that have happened,' says Fealy. 'The Trump tariffs could hit Indonesia quite hard directly, and also indirectly because they will hit China, which is Indonesia's main trading economic relationship.' Trump has announced a 42 per cent total tariff on Indonesian imports to the US, although 32 of those 42 percentage points are suspended while being reviewed. Prabowo's predecessor, Joko Widodo, promised annual economic growth of 6 per cent but rarely got above 5, so Prabowo's growth target is heroic: 'It would take a whole lot of things to align favourably to hit 8 per cent,' says Fealy, 'but he's doing everything he can to achieve it and to claw in foreign investment and increase exports.' This brings us to Albanese's visit. 'More than anything else Prabowo will want to talk to Albanese about, he will want to talk trade and investment,' Fealy says. So it's no coincidence that Albanese has exactly these topics on his list for his summit with Prabowo. Australia and Indonesia already have a free trade agreement. But Albanese sees scope for much more trade liberalisation with Jakarta. Now that the US has erected a tariff wall around itself, the nations that make up the other 85 per cent of the global economy are busily talking to each other about new trade arrangements. Albanese also intends to discuss the prospects for the Sun Cable project to deliver renewable power to Indonesia. The $30 billion project will collect solar energy from northern Australia and run it through an undersea cable to Singapore. But it must transit Indonesian waters, and there could be scope for some of its electricity to be sold to Jakarta in an offtake. The director of the Lowy Institute's South-East Asia program, Susannah Patton, dismisses an Australian commentary that the Albanese visit was 'symbolic diplomacy'. Loading 'It's hugely important,' she says. 'Prabowo has centralised a lot of power' in the Istana presidential palace. Australian ministers previously had good access in Jakarta through Indonesian foreign affairs ministers and defence ministers. But Patton points out that there is only one avenue to power that counts today. With China and Russia both seeking more influence over Indonesia while the US metes out hostile trade treatment, the Australian connection to Jakarta is more vital than ever: 'Albanese needs to find a way of establishing strategic dialogue, talking regularly with Prabowo by phone; it's the only way we are able to have any influence.'
Forbes
27-03-2025
- Business
- Forbes
Whiff Of 1998 Troubles Has Indonesia Living Dangerously Again
getty There's a whiff of 1998 in the Jakarta air as investors flee Indonesia's currency and the stock market. The outflows are nowhere near those that toppled then-dictator Suharto. His downfall came amid the chaos of the Asian financial crisis. Massive street protests forced the military officer-turned-president to resign in May 1998. Yet many voters who elected Suharto's ex-son-in-law Prabowo Subianto in 2024 are suffering some serious buyer's remorse. Prabowo also was a military man — an ex-general. And sadly, his stewardship over Southeast Asia's economy prioritizes control over reforms to increase competitiveness. Prabowo's plan to water down the central bank's independence and populist spending policies suggests he understands little about the forces behind Indonesia's 1997-1998 crash. His strong-arm tactics toward international companies like Apple suggest Prabowo doesn't know he operates in the most dynamic economic region anywhere — and that foreign CEOs have many other options. You'd think the 1Malaysia Development Berhad (1MDB) debacle might have Prabowo thinking twice about transferring ownership of top state-owned enterprises to a new sovereign wealth fund — one that reports directly to him. The same goes for expanding the role of the military, reversing post-Suharto efforts to reduce the economic role of generals. None of these steps will better position Indonesia to withstand President Donald Trump's trade war. They won't revive flagging demand from China for raw materials. They will do little to achieve Prabowo's big election pledge to hasten growth to the 8% pace from today's 5%. The sense Prabowo is fighting the wrong battles has the rupiah falling to the weakest since the Asian financial crisis. And the central bank scrambling to put a floor under the currency via formal intervention. 'We expect investor sentiment in Indonesian risk assets could remain weak in the near-term, and caution that Indonesian corporate dollar bonds could see more volatility ahead from negative headlines and overarching macro concerns,' says CreditSights analyst Lakshmanan R. Already, global funds have dumped a net $2 billion of Indonesian equities this year. And it's no wonder why as Trump's tariffs — and those to come — threaten to generate unprecedented headwinds at the worst possible moment from the global financial system. Even worse is the bull market in uncertainty emanating from Washington. Officials in Jakarta, Bangkok, Kuala Lumpur, Manila and elsewhere not knowing the scale, timing or ambitions of Trump's trade taxes makes it impossible for fiscal policymakers and central banks to strategize. In Indonesia's case, it's the pre-existing conditions that matter most. From 2014 to 2024, Prabowo's predecessor Joko Widodo put some key reforms on the scoreboard. Along with presiding over rapid economic growth and transformational infrastructure projects, Widodo achieved more than predecessors to eradicate extreme poverty in the nation of 281 million people. Under Widodo, Indonesia weathered the Covid-19 crisis better than many peers. Yet critics claim that Widodo went too easy on dynastic politics, old-time patronage and changing laws to benefit his family. And, of course, he opened the door to an unpredictable successor hailing from the armed forces. That successor is no longer enjoying the benefit of the doubt from global investors. At the end of 2024, overseas funds were teeing off Prabowo's pledges to turbocharge economic growth and attract increased investment. Now concerns about Indonesia's fiscal outlook and potential democratic backsliding have capital exiting rupiah-denominated assets. The benchmark Jakarta Composite Index is down nearly 20% across Prabowo's first five months in power, while the rupiah tests 26-year lows. Indonesia recently resorted to a foreign exchange 'retention' plan requiring natural resource exporters to deposit 100% of currency earnings into a special account at national banks for 12 months. Such bids to support currency stability and contain market volatility are rarely a sign of confidence. Analysts at Fitch Ratings observe that 'Indonesia's external liquidity — measured by the ratio of liquid external assets to liquid external liabilities — remains weaker than many 'BBB' peers.' Investors might have greater confidence in Prabowo's reform chances if he spent more time cutting red tape, creating jobs for Indonesia's young population and moving the economy upmarket into high-value-added industries than tightening his grip on the economy. Reports that Bank Indonesia will buy up state bonds through the secondary market has investors worried about the central bank funding public spending. This so-called 'debt monetization' rarely ends well for developing nations. Hence the whiff of 1998-like turbulence setting back the clock on a nation that deserves better from its leaders.
