Backgrounder
Indonesia’s stock market took a heavy blow in late August during nationwide riots and protests. On the Sep. 5 market close, the Indonesia Stock Exchange Composite fell to 7,867.35; by Sep. 8, after the weekends, it had dropped to 7,766.85, a decline of about 1.28 percent.
The controversy over double jobs for deputy ministers should now end after the Constitutional Court prohibited them from serving as commissioners in state-owned enterprises (SOEs), reinforcing its previous ruling that barred ministers and other high-ranking officials from holding such positions.
As nationwide protests have subsided, a new power struggle has emerged among Indonesia's political elite, centering on who was behind the widespread unrest last week.
The Patriot Bonds, a debt instrument issued through Indonesia’s state asset fund Danantara, have attracted demand exceeding the amount offered, despite offering a much lower coupon rate than comparable government securities. Some analysts point to quiet pressure from the Prabowo Subianto administration as a factor in the oversubscription, raising concerns that the bond’s “voluntary participation” label masks market distortion and risks crowding out private financing.
The deployment of the Indonesian Military (TNI) to crack down on massive nationwide protests, some of which descended into violence, around the turn of the month may have helped restore order. President Prabowo Subianto, for one, felt comfortable enough about the situation in the country for him to make a quick trip to Beijing.
Bank Indonesia’s second consecutive rate cut in August, and its third this year, reflected both domestic headwinds and shifting global dynamics. The central bank lowered its benchmark rate by 25 basis points to 5 percent, just a week before the U.S. Federal Reserve signaled a dovish turn. That shift further expanded the policy space for emerging markets like Indonesia to ease monetary conditions. For the Prabowo administration, the decision offers timely support for its ambitious growth agenda.
Indonesia has seen a turbulent week of public unrest centered on the House of Representatives (DPR), as outrage over lawmakers’ high pay and allowances spiraled into a broader movement demanding accountability, justice, and reform.
Prabowo Subianto's administration is rolling out a significant overhaul of Indonesia's education system, introducing new initiatives like Sekolah Rakyat (People's Schools), specialized science institutions and an expansion of military-style schools. While these are presented as reforms, critics worry they could neglect the root causes of the country's education problems while incurring substantial financial and social costs.