Prabowo Subianto was officially sworn in as Indonesia's eighth president on October 20, 2024, succeeding Joko Widodo, who completed two terms in office. The inauguration ceremony was a grand affair, attended by approximately 100,000 police and military personnel, reflecting the significant security presence in the country [2f3cd7fa].
In the February elections, Prabowo secured 58% of the votes, marking a notable victory after previous attempts in 2014 and 2019. His campaign emphasized continuity from Widodo's administration while also focusing on social assistance programs. A major promise includes providing free meals for 83 million schoolchildren, which is projected to cost around 71 trillion rupiah (US$4.5 billion) [2f3cd7fa].
Prabowo's economic vision aims for an ambitious 8% growth rate, and he plans to form a 'fat cabinet' consisting of around 44 ministries to support his governance. This approach indicates a willingness to maintain a robust administrative structure to tackle Indonesia's diverse challenges [2f3cd7fa].
In a significant move, Prabowo reappointed Sri Mulyani Indrawati as finance minister, ensuring continuity from Widodo's administration. Analysts caution that retaining much of Widodo's team may hinder new economic policies and growth targets. Indonesia currently faces a debt of about 800 trillion rupiah (US$51.1 billion) due next year, and Sri Mulyani's experience is expected to help manage the budget and maintain market confidence [5085b632].
Prabowo has expressed intentions to uphold a non-aligned foreign policy while maintaining strong relations with China. His military background is expected to influence his governance style, potentially leading to a more security-focused administration [2f3cd7fa].
The transition from Jokowi to Prabowo comes with expectations of continuity in certain economic policies, including a commitment to reduce corporate income tax from 22% to 20%. Analysts suggest that while Prabowo's administration may lean towards socialist principles, it will likely continue many pro-business initiatives established by his predecessor [2f3cd7fa].
As Prabowo begins his presidency, he faces potential challenges from civil groups and the press, which may scrutinize his administration's policies and governance style. Concerns have been raised regarding political freedoms and his past human rights record, particularly following his military dismissal over human rights abuses 26 years ago. The balance between his ambitious social programs and the need for economic stability will be critical as Indonesia navigates its future [2f3cd7fa].
The cabinet's stability is seen as crucial for achieving Prabowo's ambitious growth target. Discussions are underway regarding increasing the value-added tax from 11% to 12%, and there are concerns that a potential widening of the budget deficit to 2.9% of GDP next year could impact economic performance. Prabowo inherits an economy growing at 5% and aims to increase tax revenue to 14%-16% of GDP, which will be essential for funding his proposed initiatives [5085b632].
Vice President Gibran Rakabuming Raka was also sworn in alongside Prabowo, and the new president is expected to announce his cabinet soon, with indications that Sri Mulyani Indrawati may retain her role as finance minister. As the new administration takes shape, the focus will be on how these cabinet choices will affect Indonesia's economic trajectory [5085b632].