Prabowo Subianto has been courting trouble for months, and this week.

Prabowo Subianto has been courting trouble for months, and this week, he faced the consequences.

Issues within Southeast Asia's largest economy became evident on Tuesday, as investor worries about the former general-turned-president's fiscal policies and speculations of resignations within his Cabinet led to Indonesia's steepest stock market decline in years. Despite his finance minister stepping in to quell the rumors, many began to question the populist spending initiatives that will leave a significant impact on the nation's 280 million inhabitants. As if that weren't enough, student protests erupted today following the passage of legislation that expands the military's role, reversing restrictions that had been in place for two decades since the Suharto era, raising fears of democratic regression. Hundreds gathered outside the Jakarta legislature, with reports of protesters throwing stones and setting tires on fire while urging lawmakers to overturn the changes. This situation is concerning for one of the world's major emerging markets, a key supplier of essential minerals for electric vehicle batteries. Since taking office in October, Prabowo has been inciting apprehension. His signature campaign promise—a $30 billion-a-year free lunch program for students—represents 14% of Indonesia's total 2024 budget. His administration is also pursuing plans that could undermine the independence of the central bank, while aggressive protectionist policies have targeted foreign businesses like Apple. Despite these challenges, there seems to be no immediate threat to Prabowo, who continues to enjoy popularity and holds a significant majority in parliament.

However, this does not bode well for his goal of achieving 8% economic growth, a target that analysts increasingly view as unrealistic. As Asia contends with the repercussions of declining Chinese demand and tariff threats from US President Donald Trump, Indonesia could emerge as a crucial "swing state" between Washington and Beijing. Instead, Prabowo risks becoming yet another case of a strongman mismanaging his power. — Philip Heijman
Source @Bloomberg