Across much of the Global South, new administrations often promise structural transformation but face entrenched institutional, fiscal, and geopolitical constraints. Indonesia under Prabowo Subianto is the latest case in point. President Prabowo took office with promises of strong economic growth and major social changes. But economic turmoil, internal controversies and poor practical governance raise doubts about the achievability of the administration’s goals. Prabowo’s 8 per cent annual economic growth objective confronts formidable challenges, requiring urgent course correction from the administration.

The Jakarta Composite Index plummeted nearly 4 per cent in March. This triggered its first temporary trading halt since COVID-19, indicating a 14.8 per cent decline over the past year and making it one of the worst-performing markets globally. Prabowo brushed off the market plunge with populist reassurance, remarking that he, like the poor, does not own shares — implying that share-market downturns only affect the wealthy.

The Indonesian president’s argument ignores the flight of foreign investors, who continued to pull capital from Indonesia, with total outflows reaching Rp 26.9 trillion (US$1.6 billion) as of 17 March 2025. Amid this financial turbulence, rumours swirled regarding Finance Minister Sri Mulyani’s resignation, further unsettling investors despite her denial of them. Prabowo cannot afford to dismiss these warning signs — his administration’s reluctance to deliver clear economic interventions risks worsening macroeconomic volatility.

Prabowo pledged to double the rate of GDP growth through expanded mining operations and industrial development, prompting the legislature to rush through sweeping mining law amendments. These amendments were signed into law after just 12 hours of discussion, allowing more actors to secure mining permits with minimal supervision. The speed of these amendments raises questions about their integrity and the presence of corruption in their formulation.

These laws could speed up environmental destruction, thereby undermining Indonesia’s long-term sustainability goals. This may be the cost that Prabowo is willing to accept — the pursuit of economic growth at the expense of unchecked environmental degradation.

Amid this economic turmoil, Indonesia’s administration remains committed to costly populist programs, notably the free meal program. The projected US$28 billion initiative has already run into a trifecta of crises — financial strain, lack of capacity and unaccountability risks. Irregularities that have been flagged by the Corruption Eradication Commission have presented risks of fraud due to centralised operations and challenges in regional oversight. These vulnerabilities cast doubt on the program’s long-term viability.

Substantial budget cuts have been implemented across essential sectors to fund the program. The scale of the free meal program is unprecedented, with plans to scale up nutrition service units 30-fold by the end of 2025. The program is placing strain on Indonesia’s logistical capabilities, with the National Nutrition Agency admitting that free meals have yet to reach remote areas due to logistical infeasibility. For Prabowo to succeed, competitive contracting and increased public oversight are imperative.

Prabowo’s administration is pushing ‘efficiency’ as a fix for economic woes. Spending cuts slashed multiple ministry and agency budgets between 30–70 per cent. Up to Rp 306 trillion (US$18.5 billion) has been reallocated from ministerial budgets, with roughly Rp 171 trillion (US$10.4 billion) earmarked for the free meal initiative alone. This massive repurposing of funds pushes ministries to operate with drastically reduced appropriations, increasing the possibility of stagnation. Prabowo, an ex-general, initially ensured that key defence and security institutions remained exempt from the austerity measures. Surging public criticism of favouritism compelled a reversal of the exemption.

The uncertainty surrounding Indonesia’s newest sovereign wealth fund, Danantara, is striking; it is supposed to oversee more than US$900 billion and channel that money into sustainable, high-impact projects across pivotal sectors.

Yet day-to-day control of Danantara remains with active politicians handpicked by Prabowo and required to report directly to him. Heavier still, the fund will fold into itself the country’s three largest state banks and a number of major state enterprises, a move that invites decisions shaped more by party loyalty than by the expert analysis the money deserves and thus raises the odds of backing projects that lack thorough due diligence.

Unsurprisingly, the lofty ambitions have so far left foreign investors unruffled; they worry, with good reason, that political or personal enrichment could turn Danantara into yet another sovereign fund that collapses under the weight of corruption and mismanagement.

Indonesian experience echoes a wider trend across the Global South, where many populist leaders pump up spending and tighten sway over agencies to score quick public approval-often pushing aside the very checks that keep democracy alive. Similar trajectories in Turkey with Erdogan, Brazil with Bolsonaro, and India of Modi show how that recipe can lead to centralization and weakened accountability. Prabowos Indonesia now looks set to adopt the same playbook, leaving serious questions about how sturdy its democratic guardrails will be in years to come.

Prabowo’s reputation is running on thin ice. His administration needs an urgent course correction to govern for all Indonesians and ensure the economic and social prosperity of the nation. A timely reconfiguration of key policies and a more tactful approach to budgetary redistribution will be necessary to safeguard the legacy of his Presidency.

Note: This piece was originally published by East Asia Forum on May 29, 2025 under the title “Grand promises meet hard realities in Prabowo's Indonesia”.