As Indonesia prepares for a significant political transition, the world is watching closely. On October 1, President-elect Prabowo Subianto, commonly referred to simply as Prabowo, will assume office after securing a landslide victory in the June elections. Prabowo’s ascension to the presidency marks a notable moment in Indonesian politics, particularly because of the unusual support he received from outgoing President Joko Widodo, known as Jokowi. Despite being from different political parties, Jokowi not only endorsed Prabowo but also facilitated the political rise of his own son, Gibran, who will serve as Prabowo’s vice president.
Prabowo’s victory is seen as a continuation of Jokowi’s legacy, but there are significant differences in their approach to governance and foreign policy. As the current defense minister and a former general, Prabowo has signaled a shift toward a more assertive role for Indonesia on the global stage. This shift is evident in his early diplomatic engagements, particularly with Russia and China, raising questions about Indonesia’s future geopolitical alignment.
Prabowo’s recent meetings with Russian President Vladimir Putin have raised eyebrows internationally. His efforts to seek Russia’s nuclear cooperation indicate a potential pivot towards Moscow, especially at a time when Western countries are increasingly wary of Russia’s global ambitions. Russia, under Putin, has been pushing for a multipolar world order, and Indonesia’s support for this vision could alter the balance of power in the Asia-Pacific region.
Simultaneously, Prabowo has also shown a keen interest in strengthening ties with China, Indonesia’s most significant economic partner. China’s influence in Indonesia has grown substantially in recent years, with Beijing accounting for 26 percent of Indonesia’s exports and 32 percent of its imports in 2023. The deepening economic ties between the two countries suggest that Prabowo may look to China for economic support and investment as he seeks to reform Indonesia’s economy and address its myriad challenges.
Indonesia, the world’s fourth most populous country and the 16th largest economy, faces several economic challenges that Prabowo’s administration will need to address. Despite a strong recovery from the COVID-19 pandemic, with GDP growth at a healthy 5 percent annually and inflation under control at 2 percent as of July 2024, the country still struggles with significant structural issues.
One of the critical challenges is the shortage of skilled labor in key industries, coupled with bureaucratic red tape, complex regulations, and widespread corruption. These issues have deterred foreign investors, limiting Indonesia’s ability to attract the level of foreign direct investment (FDI) needed to sustain its economic growth. While China’s investment in Indonesia has surged, accounting for $7.3 billion in 2023, FDI from other sources into Asia’s emerging economies has declined by 12 percent.
Prabowo’s background as a successful businessman may prove beneficial as he seeks to address these economic challenges. His administration is expected to focus on creating a more business-friendly environment, reducing regulatory burdens, and tackling corruption to attract more investment. Moreover, the realization that Indonesia is not yet realizing its full economic potential is driving the future president to seek new partnerships and assert Indonesia’s role in the global economy.
One of Prabowo’s key foreign policy challenges will be navigating the growing polarization between global superpowers, particularly the US and China, and between Russia and the West. Indonesia, under Jokowi, carefully managed these tensions by maintaining a neutral stance and avoiding entanglement in the geopolitical rivalries of larger powers. However, Prabowo is expected to take a more active role, balancing relationships with various global powers to safeguard Indonesia’s regional and global interests.
This balancing act will be crucial as Indonesia seeks to expand its circle of friends and partners. While maintaining traditional partnerships with the US and Europe, Prabowo is likely to pursue closer ties with Russia and China. This strategy could help Indonesia avoid becoming too dependent on any single power bloc, thereby preserving its autonomy and influence in international affairs.
For Indonesia, this approach is not just about economic pragmatism; it also reflects the country’s moral and traditional values. As the world’s largest Muslim-majority nation, Indonesia has been critical of US foreign policy, particularly in the Middle East. The ongoing conflict in Gaza, now in its 11th month, has further strained Indonesia’s view of US global leadership. The perceived failure of the US to halt Israel’s military actions and its continued support for Israel, despite international condemnation, has led to growing disillusionment with the US among Indonesians. By contrast, Russia and China’s consistent support for the Palestinian cause aligns more closely with Indonesian public opinion, making these countries more attractive partners.
In addition to strengthening ties with Russia and China, Prabowo’s administration is expected to seek new partnerships with other regions, notably the Gulf Cooperation Council (GCC) countries. Indonesia’s trade and investment with the GCC are currently at low levels, but there is significant potential for growth. Recent free trade talks and the adoption of a five-year action plan to spur cooperation in various sectors signal a new era in Indonesia-GCC relations.
The partnership with the GCC is particularly appealing given the region’s wealth and entrepreneurial spirit, which could help Indonesia address its economic challenges. The cooperation will likely cover political and security coordination, trade and investment, and cultural exchanges, contributing to a more diversified and resilient Indonesian economy.
While navigating the complexities of global geopolitics, Prabowo will also need to address pressing domestic issues. Indonesia’s large and young population presents both opportunities and challenges. With half of the population under the age of 30, there is a significant demand for education, healthcare, and employment. Although literacy rates and school enrollment are relatively high, there is still a need for more skilled labor to meet the demands of a rapidly changing economy.
Indonesia also faces significant poverty and income inequality. Despite impressive economic growth, about 59 percent of the population earns less than $2,500 annually, and more than 9 percent live below the official poverty line. Addressing these disparities will require targeted economic policies and social programs to ensure that the benefits of economic growth are more evenly distributed.
Climate change is another critical issue that Prabowo’s administration will need to confront. Indonesia is particularly vulnerable to the impacts of climate change, with the capital Jakarta facing the threat of sinking due to rising sea levels and excessive groundwater extraction. The government’s decision to relocate the capital to Nusantara in the Kalimantan region is a bold move to address this challenge, but it also presents logistical and financial hurdles.
Infrastructure gaps and regional disparities further complicate Indonesia’s development trajectory. While the relocation of the capital may alleviate some of these issues, significant investments in infrastructure across the country will be necessary to ensure balanced development and economic growth.
As Prabowo Subianto prepares to take office, Indonesia stands at a crossroads. The new president will inherit a country with immense potential but also significant challenges. By pursuing a balanced foreign policy, strengthening economic partnerships, and addressing domestic issues, Prabowo has the opportunity to steer Indonesia toward a more prominent role on the global stage. However, achieving this will require careful navigation of the complex geopolitical landscape, as well as a commitment to inclusive and sustainable development at home. Indonesia’s future under Prabowo is one of both promise and uncertainty, and the world will be watching closely as this pivotal nation charts its course in the years to come.
