Indonesia’s New President: Continuity or Change?

Indonesia’s majority vote signals a desire to continue business friendly policies, but will the new president, an ex-army general with a controversial past, listen?

On 14 February 2024, Indonesia voted for a successor to its popular president Joko Widodo (Jokowi) – who reaches his term limit in October 2024. Unofficial poll counts to date show that Prabowo Subianto, an Indonesian ex-military general who received tacit endorsement from Jokowi, has secured the presidency with nearly 60% of the vote. Official results are expected in March, and the new president will be inaugurated in October.

While Prabowo’s win is widely seen as continuing public support of “Jokonomics”, his predecessor’s business-friendly and investment-focused policies, the incoming president is an outspoken and experienced politician likely to forge and enforce his own agenda. That said, Prabowo must win a parliamentary majority to advance his plans with relative ease. Prabowo’s presidency will have implications for investors and corporates alike, notably in terms of his economic programme and the extent to which he may push protectionist policies.

Background: The New President

Prabowo hails from an elite Indonesian family comprising several senior ministers and civil servants. He was most notably a former son-in-law of the late Indonesian dictator Suharto, who was deposed in 1998 amidst widespread allegations of corruption and financial mismanagement. Prabowo’s public image has been marked by accusations of human rights violations during his military career. In fact, in 1998, the Indonesian military dishonourably discharged him over these purported violations; he was subsequently banned from entering the US until 2019. After his expulsion, Prabowo went into business with his brother, and subsequently joined politics in 2008, founding the political party Gerakan Rakyat Indonesia (Gerindra). He ran for president twice prior to 2024. He lost both elections to Jokowi, but in 2019, formed an alliance with him and secured a cabinet appointment as Minister of Defence.

Prabowo’s chequered past has clearly not deterred Indonesian voters. There are several factors that have worked in his favour during this election: Prabowo is widely known in Indonesia given his long track record in politics; he had substantial campaign coffers; won 45% of the public vote in his last two presidential bids; and astutely adopted a widespread social media and public engagement strategy for his most recent attempt. Half of Indonesia’s 250 million registered voters are under 40 – too young to remember Prabowo’s alleged human rights transgressions or his close ties to Suharto. Human rights and democracy concerns matter less to young voters compared to pragmatic issues such as cost of living and job opportunities. Prabowo’s harnessing of social media to reframe his public image and his promises to safeguard Jokowi’s popular economic policies seem to have successfully boosted his popularity among this important demographic.

Continuation of Business Friendly Policies

While campaigning, Prabowo reassured Indonesian voters he would continue Jokonomics’ focus on infrastructure development and foreign direct investment. But it is possible that these are simply campaign promises which he is not bound to fulfil. Prabowo – despite his reinvented public persona – could still be a wildcard considering his strongman style and nationalist political stance. Prior to this election, Prabowo often expressed a preference for protectionism as opposed to Jokowi’s neo-liberalist approach. In the coming year, investors should remain vigilant for signs of national policy shifts that may impact businesses in Indonesia, including export bans and foreign investment restrictions.

Prabowo, alongside Jokowi, also faced recent public backlash for selecting Jokowi’s eldest son Gibran Rakabuming Raka as a vice-presidential candidate. Indonesian voters further accused Jokowi – who rose to power on the back of his public opposition to nepotism and cronyism – of trying to extend his legacy. However, it is highly unlikely that Jokowi can exert significant influence over Prabowo’s administration through Gibran, who will have limited power.

Political Challenges

Of course, Prabowo cannot change things on his own. Investors should not discount changes in the political landscape that might impact a Prabowo administration come October. A key factor will be whether Prabowo and his political party, Gerindra, can secure a parliamentary supermajority that Jokowi achieved for his final presidential term. Jokowi’s political party Partai Demokrasi Indonesia-Perjuangan (PDI-P) may well choose to become the lead opposition party (as it has done in the past) instead of forming a coalition with Gerindra.

Should that happen, Prabowo’s administration might face difficulties as unofficial poll counts show that PDI-P has a slight majority. But Prabowo is a seasoned politician and is no stranger to political horse trading during which local parties – including his own – are known to switch alliances to advance their own interests. While Gerindra and its allies may form the largest political coalition in Indonesia, they do not yet have an outright majority. It is too soon to say whether Prabowo can pull together a robust enough coalition.

Prabowo’s own age and possible health issues may also limit his effectiveness as leader. Indonesian media on the campaign trail repeatedly stated that the 73-year-old frequently appeared visibly tired. Prabowo has also reportedly twice suffered a stroke, though he and Gerindra leaders have consistently denied these reports.

Maintaining investor confidence

Prabowo’s presidency is set to bring a mix of continuity and change in Indonesia’s foreign policy, but it is unclear in what way. Businesses will get a better indication of the new coalition’s direction closer to October after his inauguration. Prabowo, a strongman on the cusp of consolidated political power, may be keen to use it as he sees fit. Investors should watch for emerging people of influence within the Indonesian political landscape and from Prabowo’s administration, whom they would then need to assess from integrity and political risk perspectives.