Prabowo targets corruption, resources to drive Indonesian growth
“The strength of a nation lies in its ability to control and manage its wealth,” he told lawmakers
[JAKARTA] Indonesian President Prabowo Subianto said he will use the power of the state to root out corruption and direct resources to social programmes, which he believes will drive growth in South-east Asia’s biggest economy.
The former general, speaking in his first State of the Nation address on Friday (Aug 15), touted targeting “illegal” palm oil estates and mines, as well as officials and companies suspected of corruption.
“The strength of a nation lies in its ability to control and manage its wealth,” he told lawmakers. “I am obligated to take the necessary steps, even if they are difficult and unpopular with certain people. I must take steps to save the nation’s wealth so that it can be used for the benefit of the nation today and tomorrow.”
“And I’m giving a warning,” he said later in the speech, “whether you are powerful individuals, strong figures, generals from any branch of the military or police or former generals, there is no excuse, we will act on behalf of the people.”
Prabowo rose to power last year in his third presidential bid, a landslide win on promises to carry forward the policies of his predecessor, Joko Widodo. But while Widodo’s decade in office was defined by massive infrastructure projects, Prabowo has made welfare and social programmes the centrepiece of his growth strategy.
Since taking office in October, Prabowo has moved quickly to reshape the state’s role in the economy and politics. That has included a greater role for the military in civilian government and state projects, and the launch of a sovereign wealth fund, Danantara, designed to draw new investment and manage the country’s sprawling state enterprises.
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That push to consolidate authority and boost state spending is aimed at achieving his signature goal of attaining 8 per cent economic growth, far above the current rate of about 5 per cent. He faces doubts, however, over whether massive food and farm programmes will drive the economy, and how he’ll pay for them, particularly as softening commodity prices sap revenues.
Stocks were 0.4 per cent higher as Prabowo spoke before erasing all gains into the noon break. The rupiah weakened 0.3 per cent, in line with most major Asian currencies after the dollar gained overnight following stronger US inflation data.
Prabowo is also navigating a world order upended by US President Donald Trump’s effort to rewrite global trade patterns and raise barriers to imports, including apparel and footwear that employ large numbers of Indonesians.
In his speech on Friday, he pledged to protect consumers and blamed corruption, scams and hoarding for driving up food prices. He also said that 20 million people are now receiving food under his signature free meals programme, and that the country now has a surplus of rice and corn.
“Free nutritious meals are not merely a social programme, but the foundation for creating a healthy, intelligent, and productive generation,” Prabowo said, adding that it’s “the best investment a country can make.”
The stock-taking comes at an opportune moment for the president of one of the world’s most populous nations 10 months into his tenure.
Indonesia’s economy surprised analysts last week with its fastest quarterly growth in two years, while the stock market this week hit a new high, part of a broader rally across global markets that’s been driven in Indonesia largely by domestic investors.
A weaker dollar, meanwhile, has helped the rupiah strengthen about 4 per cent since hitting an all-time low against the greenback in April. BLOOMBERG
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