Indonesia’s economy needed a shake-up, says President Prabowo

Fraud and financial manipulation have cost Indonesia hundreds of billions of dollars in lost income and tough changes were necessary to put the economy on track, Indonesia’s president says.

Prabowo Subianto told Atlantico that he did not regret radical decisions such as the creation of the powerful Danantara wealth fund.

“Some of the changes we introduced may have rattled people in the short run, but it is for the good of the country in the long run,” he said in an interview, pointing out that he has cut $18 billion of what he described as “fat” from the government budget.

This is money that would have gone “to the private coffers of corrupt officials - not for the people,” he claimed.

The Indonesian rupiah is at around record lows against the dollar as a result of surging energy prices caused by the War in Iran. Indonesia, like most of its neighbours, is a net oil importer which relies significantly on supplies from the Middle East.

But an even bigger drag has been years of trade manipulation, which has seen hundreds of billions of dollars lost as a result of companies avoiding levies by underreporting international transactions. Indonesia’s economy would have been 60 per cent larger today without this fraud, Prabowo said, adding that a range of measures were set to deliver results for his people in the coming years.

“I must admit, we could do better in communicating to the outside world what we are doing in Indonesia,” he said.  “The changes we are making today, with Danantara, with our single window for export policy, with the free meals program, with our Village Cooperatives and fisherman villages, are transformational.”

He hit out at biased commentators who he said have been misrepresenting these projects. 

The biggest economic shakeup of Prabowo’s presidency has been the creation of Danantara Indonesia, the seventh-largest sovereign wealth fund in the world, managing $900 billion in assets. 

The fund manages Indonesia’s vast state-owned enterprise portfolio and is charged with helping achieve government targets around economic growth and industrial transformation.

The fund reports to the presidency, unlike some other national wealth funds, because it needs to be accountable to the Indonesian people, Prabowo said. But it answers operationally to its own supervisory board and takes day-to-day decisions independently.

Might vs Right

Indonesia, the world’s fourth most populous country, has always steadfastly pursued a policy of non-alignment. Prabowo said the country has benefitted from tensions between China and the US as businesses seek alternative locations to diversify their supply chains. But he noted that the long-term interest of the whole world is for a harmonious relationship between the two superpowers.

Prabowo reiterated his absolute support for freedom of navigation, rejecting suggestions that Indonesia might one day seek to monetise shipping through the Strait of Malacca as Iran is trying to do in Hormuz. The country is expanding its military to ensure that it can defend the rules-based order, he told Atlantico: “Might must not make right.”

Indonesia subscribes to the One China policy, and Prabowo said that he believes China will always act “rationally” in its relations with Taiwan.Image via Deposit Photos