Prabowo Subianto's presidency marks a potential shift in Indonesia's economic strategy, emphasizing human capital over infrastructure development.
The $28 billion initiative for free meals demonstrates a direct approach to combatting poverty and improving health among vulnerable populations.
Investment from China remains a cornerstone of Indonesia's economic strategy, highlighting the importance of international relations in domestic growth.
Prabowo's focus on human capital development may lead to increased investments in education and health sectors.
If the capital relocation project is suspended, Jakarta will continue to face challenges related to overpopulation and infrastructure strain.
Continued Chinese investment could strengthen Indonesia's position in the Southeast Asian economy, but may also raise concerns about dependency.
Indonesia's New President Prabowo Subianto Aims for Economic Growth
Indonesian President Prabowo Subianto has been inaugurated as the eighth president of Indonesia, taking over from Joko Widodo, who left office with a strong economic legacy. Prabowo, a former defense minister, has ambitious plans to elevate the country's economic growth rate from the current 5% to 8%. In his victory speech, he emphasized the need for unity to eradicate poverty and improve the living conditions of the Indonesian people, who number over 280 million.
To achieve these goals, Prabowo is focusing on major national projects and utilizing Indonesia's extensive natural resources. A key component of his agenda is a $28 billion initiative aimed at providing free meals to children and pregnant women, set to launch in January. This program is expected to address the stagnation in growth that has adversely affected more than 20% of children under five years old and create millions of jobs.
Shift in Focus from Infrastructure to Human Capital
While Jokowi's administration prioritized infrastructure projects, including roads, bridges, and airports, experts suggest that Prabowo may shift his focus towards human capital development. According to economist Yossi Rizal-Damuri, Prabowo will not completely abandon infrastructure but will adopt a more balanced approach, emphasizing agriculture and self-sufficiency as part of his economic strategy.
Prabowo inherits a significant project to relocate the capital from Jakarta to Nusantara, a green city under construction in East Borneo. However, the completion of this capital is not expected until 2045, and there is speculation that Prabowo may reconsider this move and maintain Jakarta as the capital.
Additionally, Prabowo supports the national resource protection policies initiated by Jokowi, particularly in the nickel sector, which is crucial for the electric vehicle supply chain. He has also shown a commitment to attracting foreign investment, notably from China, which has been vital for Indonesia's economic growth. His early meetings with Chinese President Xi Jinping underscore this focus.
As Prabowo's administration takes shape, his cabinet selections and budgetary decisions will further clarify his economic direction. The retention of Finance Minister Sri Mulyani indicates a commitment to continuity and cautious financial management, signaling to markets that stability will be prioritized in the new government.
