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Anand Mathai

Reuters

Indonesian President Prabowo Subianto acknowledged on Friday that his government had yet to fulfil all its promises, an unusual note of self-criticism as he sought to reassure Indonesians and investors while pressing ahead with his ambitious economic agenda.
Analysts said the shift in tone was notable but saw little evidence that Prabowo was changing course on his more state-directed economic policies.
In his annual state address ahead of Independence Day and a later budget speech, Prabowo said the country’s problems were being addressed, predicted economic growth could reach 6 per cent this year and defended greater state oversight of strategic industries.
“I cannot yet say that all the nation’s problems have been resolved, or that every promise I made has been fulfilled. Not yet,” he told parliament.
Wasisto Raharjo Jati, a political sociologist at Indonesia’s National Research and Innovation Agency, described the acknowledgement as “very surprising”, saying Prabowo had rarely publicly conceded that his policies had fallen short.

He said the change in tone appeared partly aimed at responding to public criticism that had begun to damage the president’s reputation.
Prabowo’s approval rating fell to 51.1 per cent in July from 81.2 per cent last November, according to a survey by Saiful Mujani Research and Consulting, with dissatisfaction over the economy a major factor behind the decline.
Nicky Fahrizal, a researcher at Jakarta’s Centre for Strategic and International Studies, also described Prabowo’s acknowledgement of unmet targets as “an act of statesmanship”.
But he said it would need to be followed by measurable improvements in bureaucracy and governance.
“Without real improvements, public dissatisfaction will continue to build and risks undermining the president’s position in the near term,” Fahrizal said.
The former special forces commander took office in October 2024 after a sweeping election victory built on promises to root out corruption, lift economic growth ‌from 5 per cent to 8 per cent and give free meals to millions of children.
But his administration ⁠has struggled this ⁠year with a depreciating rupiah and a poorly performing stock market, as well as concerns over government overspending and central ‌bank independence, while his flagship free meals programme has been hit by budget cuts and allegations of mismanagement.
Prabowo nevertheless said investment in Indonesia would continue to grow and create jobs, arguing that gross domestic product growth could reach 6 per cent by the end of the year.
He also presented food and energy self-sufficiency as crucial protections against global instability, saying Indonesia could not remain dependent on outside supply if international conditions worsened.
Prabowo has made food self-sufficiency a main priority of his administration, framing lower reliance on imports as essential to national security.
He said on Friday that Indonesia had so far achieved self-sufficiency in eight food commodities and that supplies remained secure despite the threat of the El Nino dry weather pattern.


One closely watched part of the speech was Prabowo’s clarification of a controversial plan to exert greater state control over commodity exports.
When he last addressed parliament in May, Prabowo announced plans to centralise exports of strategic natural resources under a new state-run entity, Danantara Sumberdaya Indonesia (DSI), prompting concern among investors and exporters about how the system would work.
On Friday, Prabowo stressed that DSI would monitor and process commodity exports rather than take over the trading itself, although its role would continue to expand.
“We do not want the Indonesian people to be cheated any more. Indonesia’s wealth must not enrich a select few while leaving our people to live in hardship,” he said.
Prabowo said DSI had monitored more than 6,500 transactions involving three key commodities during its first two months, covering US$14 billion in exports, and had identified a potential US$5 billion in export proceeds from differences between reported and actual prices.
The system would soon expand to 50 ports and eventually cover all strategic commodity exports, Prabowo said.
But Prabowo also used his later budget speech to announce a new exchange for strategic minerals and commodities that is expected to begin operating by January 1, 2027, part of an effort to give Indonesia greater influence over the prices of its key exports.
Made Supriatma, a visiting fellow in the Indonesia Studies Programme at the ISEAS – Yusof Ishak Institute, said the new approach differed from Prabowo’s original proposal to route exports through DSI, but questioned how much power Indonesia could wield over prices set in international markets.
“The issue then arises: given the nature of trade, does Indonesia possess the leverage to dictate prices?” Made said.
“If international prices are low but Indonesia sets a high price, the country will fail to generate revenue.”

In a report after the speech, Bank Danamon analyst Irman Faiz said it would be important “to ensure that tighter oversight does not increase transaction costs for exporters or discourage private investment”.
Prabowo’s 2027 budget proposal, meanwhile, set out plans to spend 4,097.2 trillion rupiah (US$229.73 billion), up 3.9 per cent from the projected spending level for this year.
Revenues are expected to reach 3,426 trillion rupiah next year, up 6.8 per cent from this year’s estimate.
The proposed fiscal deficit of 2.4 per cent of GDP would be the smallest since 2024 and down from the 2.85 per cent deficit projected for 2026. Indonesian law limits the government’s annual budget deficit to 3 per cent of GDP.
Prabowo said the budget would remain expansive while focusing on eight key programmes, including food and energy self-sufficiency, development of domestic industries and education.
The figures assume GDP growth of 6 per cent in 2027, inflation of 2.5 per cent, an average rupiah exchange rate of 17,500 to the US dollar and an average 10-year bond yield of 6.9 per cent.
Nailul Huda, director of economy at the Centre of Economic and Law Studies (CELIOS), was considerably more sceptical, calling the 6 per cent growth target “too optimistic” given weakening global conditions and pressures on household purchasing power and employment.
CELIOS expects growth of no more than 4.7 per cent in 2027, Nailul said, arguing that the boost from government spending in 2025 and 2026 would be difficult to repeat next year.
By contrast, Maybank economist Brian Lee said that, aside from the growth target, the budget assumptions were “rather conservative” compared with those in the 2026 proposal.
The government’s official GDP growth target for this year is 5.4 per cent, although Prabowo said on Friday that he believed growth could reach 6 per cent.
He has set a target of lifting growth to 8 per cent by 2029. The economy expanded 5.3 per cent in the second quarter of this year.

Inflation in July stood at 2.88 per cent, comfortably within the central bank’s target range, helped by government fuel subsidies.
Prabowo also used his state address to highlight tighter control over other parts of the economy, including a crackdown on illegal tin mining and a sweeping reorganisation of state-owned enterprises.
He said the government had identified 1,074 state-owned entities and subsidiaries, of which 290 had already been closed. His administration aims to reduce the total to no more than 300 by the end of this year, retaining businesses that are productive and create value.
Made said the restructuring illustrated the increasingly central role Prabowo envisaged for Danantara in directing development and investment.
“Danantara is clearly no ordinary sovereign wealth fund; it serves as both an economic and a political arm,” he said, adding that it was “set to become the driving force behind development”.
Nicky said the change in how the DSI policy was presented did not, in his view, signal a broader shift in Prabowo’s approach to government.
“A centralised command model will remain a hallmark of the Prabowo era,” he said. “If there is an adjustment in the narrative, it is most likely tactical, aimed at satisfying markets and investors in the short term.”
Indonesia also plans to revise its citizenship law to allow some citizens to hold dual nationality for the first time, Prabowo said, in an effort to allow “millions” in the Indonesian diaspora to contribute to the country’s development.
Prabowo said the dual citizenship policy would be “limited” and designed in a measured way, with national interests fully protected.
Indonesian law does not currently recognise dual citizenship for adults, and minors with two passports must choose their nationality when they turn 18.


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Indonesia’s President Prabowo Subianto delivers his annual State of the Nation Address ahead of the country’s Independence Day at the parliament building in Jakarta, Indonesia, on Friday. Photo: EPA

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Analysts said his rare self-criticism showed responsiveness to pressure but questioned whether a commodity policy shift marked real change


Analysts said his rare self-criticism showed responsiveness to pressure but questioned whether a commodity policy shift marked real change.


Prabowo Subianto

Commodities

Why Prabowo’s softened tone might not signal a change in Indonesia’s economic course

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Analysts said his rare self-criticism showed responsiveness to pressure but questioned whether a commodity policy shift marked real change

Analysts said his rare self-criticism showed responsiveness to pressure but questioned whether a commodity policy shift marked real change