Indonesia’s newly elected president, Prabowo Subianto, is navigating a challenging economic landscape as he marks his first year in office. Subianto, in charge of Indonesia’s $1.4 trillion, highly competitive economy. He wants to spark creative, explosive development and create the transformational social progress he pledged in his campaign in so many formerly segregated neighborhoods. He hopes to achieve a lofty 8% annual growth rate by 2029. This target is an ambitious signal of his dedication towards accelerating Indonesia’s economy and improving the quality of life for all Indonesians.
In recent months, Subianto has made concerted efforts to accelerate Indonesia’s trade relations. Most recently, he signed agreements with the European Union and the United States. Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, expressed optimism about the country’s economic outlook, predicting that trade with the European Union will increase by two and a half times over the next five years. Only last month, we negotiated a lower climate tariff on electric vehicles with the EU. This deal represents a significant move to strengthen Indonesia’s position in global trade.
Indonesia is open and ready to conduct a trade deal with the United States of America. This agreement, which will mirror the EU deal, should be finalized by the end of October. The country now fights against a 19% tariff on their exports to the U.S. This is a direct result of the ongoing trade war started by the Trump administration’s tariffs on solar. These tariffs present significant obstacles for Indonesian exporters seeking to establish a foothold in the U.S. market.
Subianto’s flagship initiative is a free school meals program, which would have an annual price tag of $28 billion. This program is incredibly important to fight food insecurity for children. The policy has been heavily criticized following news reports that more than 9,000 children have gotten sicker since the message was introduced in January. The adverse health impacts have cast doubt on the program’s implementation and effectiveness.
Subianto is very encouraged by what his administration has accomplished so far. He highlighted the rapid progress made in expanding social programs, stating:
“Brazil needed 11 years to reach 47 million beneficiaries. We’ve reached 30 million in 11 months. We’re quite proud of what we’ve achieved.” – President Prabowo Subianto
Hartarto said the priority now is to improve Indonesia’s investment climate. He emphasized that dealing with value chain issues and speeding up deregulations are key to bringing greater foreign investments.
“Indonesia knows that higher growth is achievable. But of course, we have to see the global economics and the global trade,” – Airlangga Hartarto
The administration is also working to strengthen Indonesia’s digital economy, attracting more jobs and driving growth. Among other moves, the country recently unveiled a new sovereign wealth fund, Danantara. This fund is intended to support complex, high-impact projects in sectors such as renewable energy and advanced manufacturing. With economic diversification and sustainable development in mind, this flagship project represents Indonesia’s largest step towards a green economy.
Yet, positive reactions have not characterized all dimensions of Subianto’s presidential campaign. Protestors have hit the street across the country in anger at skyrocketing living expenses. This civil strife has caused immense property damage, including the looting of the residence of respected former finance minister Sri Mulyani Indrawati. The protests highlight public discontent regarding economic challenges, particularly as citizens grapple with inflation and high prices for essential goods.