Talking Indonesia: Prabonomics

This past week has seen what some have argued are the first big mobilisations of the new Prabowo government, with coordinated student protests across 12 cities under the banner of “Indonesia Gelap”, or “Dark Indonesia”.

The students list a number of demands, from human rights to environmental issues, but the trigger for these protests lie in deep budgetary cuts initiated across the public service, to the tune of US$44 billion. The worst ministries and agencies — including the Ministry for Manpower and the Ministry for Public Works — have proposed cuts of up to 55%. The National Consumer Protection Agency is being cut a whopping 73%. Meanwhile, the National Police, the Ministry of Defence and the Supreme Court are seeing cuts of around 15-16%.

The government is selling these cuts as efficiency dividends for a sluggish and unproductive bureaucracy, and the savings will be directly diverted to fund Prabowo’s policy promises.

This includes, of course, Prabowo’s signature investment in human capital, the Free Nutritious Meals program (Makan Bergizi Gratis, MBG). But around half of these savings, US$20 billion, will be diverted to a a new sovereign wealth fund, known as Danantara, which stands for Daya Anagata Nusantara.

Danantara is a super-holding company for state enterprises, modelled on Singapore’s Temasek, which will be used to invest in mega projects like food estates, renewables and nickel.

What is Prabowo’s economic agenda? How will it reshape the country and confront the key challenges in the years ahead? Will Prabowo’s economic plans take the country closer to its grand plans for Golden Indonesia 2045?

To help us unpack Prabonomics, Dr Jacqui Baker chats with Riandy Laksono, a researcher at the Centre for Strategic and International Studies (CSIS) in Jakarta and Australia-Awards PhD candidate at the Arndt-Corden Department of Economics at the Australian National University.

In 2025, the Talking Indonesia podcast is co-hosted by Dr Jacqui Baker from Murdoch University, Dr Elisabeth Kramer from the University of New South Wales, Tito Ambyo from RMIT and Dr Jemma Purdey from the Australia-Indonesia Centre.