Yet only five months after taking office, he is confronted with a host of compounding challenges and chaotic policy rollouts that have resulted in public protests and market jitters.

The President’s signature campaign promise was a free school lunch program, a US$29 billion project through the end of his term in 2029. That in itself was going to push government spending above the debt limit and lead to cuts in other social services.

While the program has 80 percent popular support, its rollout has been chaotic, leaving questions about how it will be paid for.

The former defense minister also harbors ambitions for military modernization.

For years, defense spending has been 0.7 to 0.8 percent of gross domestic product (GDP), roughly $9 billion. That has limited capital improvements, meaning that over half of the military equipment is antiquated. To get to the minimum essential force (MEF) targets, Indonesia needs to spend closer to 2.5 percent of GDP on defense.

In addition, exports have fallen amid the cooling of China’s economy, even as domestic consumption has fallen as a result of the contracting middle class.

While GDP under president Joko “Jokowi” Widodo increased from $891 billion in 2014 to $1.371 trillion in 2023, the gains were not equally distributed and the middle class was hard-hit.

His successor Prabowo announced the launch of the new sovereign wealth fund Daya Anagata Nusantara (Danantara) to support a targeted 8 percent growth. With the goal of $900 billion in assets under management, Danantara would be among the largest in the world, but details about its capitalization have been less concrete.

The fund is expected to take over all government holdings in state-owned corporations including three key banks: Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI).

Given the country’s endemic corruption and weakening government oversight, the potential for graft has rattled some investors, and all this uncertainty has battered Indonesia’s financial markets.

On March 18, Indonesia’s main stock index tumbled 7.1 percent over concerns about Prabowo’s economic policies and fears of a global trade war. Regulators briefly suspended trading for the first time since 2020.

In addition, rumors of respected Finance Minister Sri Mulyani’s resignation further scared investors. The holdover from the Jokowi administration has denied the reports, but given her fiscal discipline and Prabowo’s populist policies, a clash was inevitable.

Indeed, $18.8 billion in proposed spending cuts provoked student protests to erupt nationwide.

Foreign investors have already dumped nearly $1.8 billion in Indonesian stocks in the first quarter of 2025, which led to a 2 percent decline in the value of the rupiah. The Indonesia Stock Exchange is down 20 percent from its September 2024 peak, and is the poorest performing exchange in the region.

Revised military law

But perhaps what spooked the financial markets the most was Prabowo’s most significant legislative victory to date: the passage of the revised Indonesian Military (TNI) Law on March 20.

The changes will allow the military to claw back many of the civilian authorities it ceded following the fall of Soeharto and the New Order regime in 1998.

Passed in 2004, the TNI Law legally ended dwifungsi (dual function) that gave the military sweeping civilian authorities. It allowed uniformed military personnel to hold just 10 senior civilian functions in national security, including the roles of defense minister, coordinating politics and security affairs minister and National Intelligence head. Otherwise, the military ceded most of its administrative powers and the troops returned to the barracks.

Under Jokowi, the military began to regain many civilian authorities, including roles in food and internal security, using a new national security concept known as Bela Negara (state defense).

The revised law increases the number of positions open to military officials to 15 and greatly broadens the definition of national security to include the coordinating minister of maritime affairs and fisheries, the counterterrorism head and the disaster management agency. The attorney general, the country’s top law enforcement officer, can be a uniformed officer within the military’s chain of command.

The newly amended law could pave the way for military personnel to serve on the boards of state-owned enterprises, which continue to play an outsized role in Indonesia’s economy.

It is seen as the most serious reversal to civilian oversight of the military since the fall of the New Order and is sure to provoke more student unrest.

Papua’s role

The intersection of Prabowo’s populism and security agenda is being played out in the restive region of Papua, where he served as a member of the military’s special forces (Kopassus) battling the Free Papua Movement (OPM), so part of this is unfinished business.

While peace processes in East Timor and Aceh were negotiated, neither the government nor the military has any desire to seek a durable political solution in Papua. If anything, Prabowo is doubling down on internal colonial policies.

Papua is key to resolving the country’s chronic food insecurity and fulfilling Prabowo’s pledge to achieve food self-sufficiency by 2028.

Indonesia imported 3.8 million tonnes of rice in 2023 and over 4 million tonnes in 2024.

Papua was Prabowo’s first official trip after his inauguration on Oct. 20, 2024, and he was filmed driving a large rice harvester in Merauke, South Papua. Local residents have resisted the farms.

On March 23, the TNI announced it had redeployed 450 troops from Maluku province to the Papua region, bringing the total since Prabowo took office to over 20,000 additional troops, including five newly established battalions, in the country’s easternmost territory.

That announcement came days after reports that one transmigrant was killed and seven others were injured by the region’s secessionist liberation army. It has declared that all teachers and health workers will be considered Indonesian soldiers under the new TNI Law, creating an exodus in the region.

All this has only reinforced Papua’s belief that the territory is under occupation, which has led to a renewed cycle of violence.

In short, in trying to solve problems, Prabowo is creating new ones.

---

The writer is a professor at the National War College and an adjunct professor at Georgetown University. The views expressed are personal.