Corporate entities in Indonesia find no shelter in patriotism as a defense mechanism
Indonesian President Prabowo Subianto's Ambitious Economic Plans and the Launch of Patriot Bonds
Indonesian President Prabowo Subianto has unveiled a series of ambitious plans for economic development, including the issuance of Patriot Bonds worth over $1 billion. The bonds, which are being issued by a powerful new sovereign wealth fund reporting directly to Prabowo, are intended to fund projects that will define the next century of Indonesia's prosperity.
The launch of the Patriot Bonds comes amidst a backdrop of public discontent about low wages and entrenched inequality in Indonesia. Street protests have occurred in major cities due to anger over a hike in lawmakers' allowances and the death of a motorcycle taxi driver. Authorities have vowed a firm response to the protests, which led to three deaths in Makassar and buildings being set ablaze throughout the country.
Prabowo's goals include propelling Indonesia's growth to 8%, a target few countries achieve, and becoming a high-income country by the middle of the century. These plans resemble a muscular form of state capitalism, reliant on the leader's imprimatur. Prominent entrepreneurs connected with the new Sovereign Wealth Fund Danantara who have agreed to purchase more than 1 billion US dollars in patriot bonds include Arsjad Rasjid and Sukanto Tanoto.
However, Prabowo's budget projections do not inspire confidence. His fiscal shortfall projections for next year are 0.3% less than the current year's, despite the lack of new taxes. This raises questions about the sustainability of his ambitious plans.
Prabowo's approach is a stark contrast to his predecessor, Joko Widodo, who was a self-made businessman. Widodo sought to cut red tape and make it easier to hire and fire, unlike Prabowo who is closely monitoring which businesses participate in the bond sale and which may hesitate.
One of Prabowo's most controversial plans is the development of a new capital in the forests of Borneo. Despite a perceived dimming of enthusiasm for the project, Prabowo remains committed to it. This decision has sparked concerns about environmental destruction and the displacement of indigenous communities.
Prabowo's allies have a tight grip on parliament, and he has enlisted the troops in his social welfare agenda, potentially blurring the line between civil and military functions. The yields on the Patriot Bonds will allegedly be below-market rates, suggesting a sacrifice of returns for the cause.
Danantara will play a massive role in marshalling all levels of government and society towards Prabowo's goals. The issuance of the Patriot Bonds is part of Prabowo's ambitious plans for economic development, including a free school lunch program, a giant sea wall along Java's coastline, and the development of agricultural cooperatives.
Prabowo has also shown a willingness to take action in response to public outcry. For instance, he offered condolences, chastised the officers, and ordered an investigation into the motorcycle taxi driver's death. As the future of Indonesia's economy unfolds, it remains to be seen whether Prabowo's ambitious plans will deliver on their promises.
