After long-time ruler Suharto was toppled in street protests in 1998, Indonesians worked hard to remove the security apparatus from civilian life. Prabowo has since turned to the army and police to implement his flagship initiatives, including his free school lunch program. This has meant the deployment of tens of thousands of troops across the vast archipelago, who will provide a convenient tool in the event of instability.
Indonesians don’t want security services in public life, and their recent behaviour is hardly cause for comfort. Calls for shoot-on-sight policies to combat crime and persistent allegations of excessive force have only heightened fears.
WHAT INDONESIA NEEDS
It’s important that Prabowo has an economic team that’s taken seriously by the markets. He made a big mistake firing Finance Minister Sri Mulyani Indrawati in September. The former World Bank executive was a reassuring presence in the cabinet of former President Joko Widodo and during the first rocky months of Prabowo’s term. Whenever markets wobbled, she was there to insist that spending rules would be upheld, along with central bank autonomy. He should consider recalling her.
Purbaya Yudhi Sadewa, her successor, doesn’t have the same cachet. He wasted critical capital in his early months by picking a fight with a Citigroup economist who made bearish comments on Indonesia’s finances. This shoot-the-messenger response is unbecoming of a government minister.
It’s not too late to fundamentally change course. For all the currency’s weakness and the dramatic steps from Bank Indonesia, a lot more would have to go wrong to replicate the enduring collapse of the 1997-1998 Asian financial crisis. The rupiah’s value was shredded, Suharto was forced out, and years of communal violence and terrorism followed.
Army brass are trained to be decisive. In the battlefield of capital markets, this could be a great opportunity to regroup. Prabowo just needs to rise to the occasion.
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