reader Posted March 27 Posted March 27 From The Nation Indonesia’s economy is under significant pressure as the rupiah hits a 27-year low, and the Jakarta Stock Exchange Composite Index plunges 7.1%—its steepest drop in 14 years. These signals may point to deeper structural issues in the country’s economic and political landscape. Bhima Yudhistira Adhinegara, Director of the Jakarta-based Center of Economic and Law Studies, warns that the rupiah’s depreciation reflects market distrust toward President Prabowo Subianto’s leadership and economic policies, including the establishment of the Danantara sovereign wealth fund. Indonesia was once a top investment destination in the region, but last year, it lost its appeal among global investors at an alarming rate. Under President Prabowo Subianto, the government has made steep budget cuts across critical sectors, such as higher education funding slashed by 39%, healthcare spending reduced by 18.5% and public infrastructure projects cut by a staggering 73% As the global economy slows down, these cuts are not seen as strategic adjustments but rather as confidence-shaking measures that erode public trust, heighten economic concerns, and trigger capital outflows from Indonesia. President Prabowo’s “populist” policies have become an increasing concern regarding economic policy stability. His universal free school lunch program, expected to cost a massive 950 billion baht per year, risks pushing Indonesia’s budget deficit beyond the legally mandated 3% of GDP. In February, Indonesia established Danantara Indonesia, a sovereign wealth fund consolidating several state-owned enterprises, and announced its advisory board members, including former Thai Prime Minister Thaksin Shinawatra, billionaire Ray Dalio, and investor Chapman Taylor. Initially seen as an ambitious move, the Danantara fund is now being regarded as a potential “financial time bomb” that could destabilize the economy. Critics have raised concerns over its management and transparency, suggesting that investment decisions might be driven more by political than economic factors. With rising budgetary demands from both Danantara and Prabowo’s populist policies, Indonesia may face increased fiscal burdens, including a widening budget deficit. Indonesia was once one of the most attractive markets in the region, but last year, it rapidly lost its appeal among global investors. President Prabowo’s administration has made deep budget cuts across essential sectors, slashing higher education funding by 39%, healthcare spending by 18.5%, and public infrastructure and utilities projects by 73%. Continues at https://www.nationthailand.com/blogs/news/world/40047953 tm_nyc, FunFifties, splinter1949 and 1 other 1 3 Quote
