Published on August 15, 2025, by Bloomberg
By Faris Mokhtar and Grace Sihombing
At private dinners with family and confidants, Indonesian President Prabowo Subianto often speaks admiringly of historical figures like Abraham Lincoln, Nelson Mandela and Mahatma Gandhi.
Yet one name stands above the rest: Deng Xiaoping. According to people who have heard the president speak at intimate gatherings, Prabowo reveres Deng both for breaking with party orthodoxy to propel China’s economic miracle and for his resilience — cast aside for years, yet taking power at the age of 74.
“What I admire about him is his never-give-up spirit,” Prabowo once wrote. “Three times dismissed, once detained at an old age and already elderly, it turned out he was the one who led the rise of China.”
The 73-year-old Prabowo — an ex-special forces commander who went into self-imposed exile after the fall of dictator Suharto in 1998 — sees himself as a similarly transformative figure. To win power last year, the former general softened his image enough that voters ignored past allegations of Suharto-era human rights abuses. Upon assuming office in October, he quickly rolled out a series of bold initiatives. People familiar with his thinking described a president intent on emulating China’s model of rapid, state-driven development, while also seeking a measure of personal redemption.
“He wants to leave a mark different to the reputation that others have labeled on him,” said Achmad Sukarsono, associate director and lead analyst for Indonesia at risk consultancy Control Risks. “He craves for some sort of hero worship — adoration from the masses and esteem from the elites.”
Prabowo’s efforts to follow in Deng’s footsteps appear mostly limited to his personal qualities and legacy at the moment. Deng unleashed China’s economic miracle by dramatically loosening state controls, welcoming foreign investment and embracing market-friendly policies. Prabowo appears to be going in the opposite direction, leaning on a stronger hand for the state.
Investors for now aren’t convinced that Prabowo is much more than a populist, focused more on consolidating power and grabbing headlines than making deep structural reforms to broaden the tax base, improve the education system and cut red tape. Indonesia’s gross domestic product is forecast to grow 4.8% this year, which would be the slowest pace since 2009 excluding the first two years of the pandemic — and a setback for the nation of 284 million people seeking to become one of the world’s biggest economies.
This account of Prabowo’s first 10 months in office is based on more than a dozen interviews with people familiar with the president’s thinking, many of whom asked not to be named to speak about private conversations. A spokesman for the president didn’t respond to multiple requests for comment, including written questions.
The concerns about Indonesia’s economy will be top of mind when Prabowo delivers his first annual budget and state of the nation address Friday. Both offer him a chance to reassure skeptics that his promises won’t outrun fiscal realities, or destabilize a country that has long served as a bastion of moderate Islam — and a balancing force amid US-China competition in one of the world’s busiest trade regions.
Course Correction
In the months since taking office, Prabowo has swiftly concentrated authority in one of the world’s most populous nations, amassing tools of control rivaling any leader in Indonesia’s modern democratic era. He has created a cabinet of more than 100 ministers, deputies and agency chiefs, and rallied support from nearly every major political party. He’s placed Indonesia’s powerful state-owned enterprises under the control of a quickly formed new sovereign wealth fund, Danantara, which answers directly to him. He has reallocated billions in state spending to bankroll his signature programs, and is pushing legislation to make the central bank more supportive of growth, syncing monetary policy with the government’s broader agenda.
Markets balked at some of the president’s early moves, but people familiar with Prabowo’s thinking said he sees his policies as a course correction of sorts. Under the decade-long rule of his predecessor, Joko Widodo, Indonesia poured resources into infrastructure: roads, ports, even a new capital. But that building spree across a nation of more than 17,000 islands left state construction firms deep in debt and, in Prabowo’s view, eclipsed the country’s most pressing need: developing its people.
“If the state must determine development priorities,” Prabowo wrote in his book Indonesia Paradox, “realizing people’s welfare and improving inequality must be the main work program.” The titular paradox, he added, is that Indonesia is rich in natural resources and human resources, but “most Indonesian people are currently living in poverty.” His younger brother Hashim Djojohadikusumo, a businessman, once described himself as a capitalist and his brother as “more of a socialist,” drawing from their father who once chaired an influential socialist party.
The corrections have come swiftly: the beginnings of one of the world’s most expensive free meals programs, plans for tens of thousands of new community cooperatives meant to develop rural areas and pledges to modernize Southeast Asia’s largest military. Prabowo envisions building thousands of acres of state-run farms nationwide, and tripling the tropical nation’s number of dairy cows. He launched Danantara, a dream of his economist father, to serve as an engine for his signature goal of boosting economic growth to 8% — a rate not seen since Suharto’s rule.
“Prabowo has big dreams,” said Siti Zuhro, a political analyst at Indonesia’s National Research and Innovation Agency. “He’s straightforward and has a mindset where if you can be fast, you shouldn’t take too long to accomplish things.”
He can also move at a more deliberate pace, a person close to the president says, often rising early and swimming at his estate home in the hills south of Jakarta, where he keeps a stable of Lusitano horses and drinks Arabica coffee grown in the area. There he does much of his thinking and strategizing, with aides instructed to be ready to take notes at a moment’s notice, the person said. Cabinet meetings generally take place after lunch back in the crowded capital.
But in the larger scheme, he’s making up for lost time. Prabowo, having won in his third presidential bid, has privately told confidants he might have only one shot at remaking Indonesia in ways he’s imagined for decades. While he’s considering a second term and has his party’s endorsement, allies say he’s aware that age, stamina and voter sentiment could all undermine his goals.
His drive also runs deeper: redemption. Once a rising star in Indonesia’s army and son-in-law to Suharto, Prabowo’s life dramatically unraveled in 1998, when Suharto fell, Prabowo’s marriage dissolved and he was discharged from the military. He left Indonesia for a time, living in self-imposed exile in Jordan. When he returned to a newly democratic country, he spent decades trying to recapture political influence.
An Early Reckoning
Several months into his presidency, Prabowo faced a reckoning that exposed broader doubts about his ambitions.
Officials in February realized they were headed for a rare early-year budget deficit after an unexpected fall in state revenues, according to a person familiar with the matter. The Finance Ministry had anticipated some softness due to weaker commodity prices, but the shortfall was so stark that it raised deeper concerns about economic fundamentals, the person said. If the downturn was structural, how would they explain it to the president, and to markets? Officials delayed releasing January’s budget numbers as they probed further.
Actions by Prabowo show he was already mindful that Indonesia’s economic engine was at risk of losing steam. He had scaled back a planned increase in taxes hours before it was to take effect on New Year’s Day, citing a desire to protect public purchasing power. On March 6, in a closed-door meeting with some of Indonesia’s wealthiest tycoons, he heard growing concerns about the domestic economy and rising layoffs and said he was trying to turn the situation around, according to two people familiar with the discussions.
A day later he hosted a meeting of influential business people and ministers with Ray Dalio, the founder of Bridgewater Associates. In public remarks, he said Dalio was in a position to speak with the country’s leaders openly and critically. “And I think we do need critical advice,” Prabowo said.
Meanwhile, market watchers were taking note of growing uncertainties surrounding the new administration’s spending plans. In the course of a week in early March, Goldman Sachs Group Inc. downgraded Indonesian assets, citing rising fiscal risks from a series of Prabowo’s initiatives, while Fitch Solutions’ BMI raised concerns that the fiscal deficit could widen to the legal ceiling. Oversea-Chinese Banking Corp. cut its economic growth forecast, citing the near-term impact of policy priority changes and a “highly uncertain” fiscal outlook. Fitch Ratings Inc. warned of the same.
On March 13, officials publicly revealed a deficit over the first two months of the year. Finance Minister Sri Mulyani Indrawati attributed a 21% drop in state revenue to technical issues, but said the trend was improving.
Yet markets sensed dysfunction, and when rumors began circulating that Indrawati — a respected former World Bank executive and a symbol of fiscal credibility for three presidents — would leave the cabinet, confidence buckled. The Jakarta Composite Index posted its steepest one-day drop in more than a decade, and the rupiah, already among Asia’s weakest currencies in 2025, slid further.
“The only person who can build trust with investors is Sri Mulyani,” said Bhima Yudhistira Adhinegara, executive director at the Jakarta-based Center of Economic and Law Studies. Her lack of political affiliation at a time when the bureaucracy is “increasingly politicized,” and when military officers have been allowed to serve in government posts, stands out, he said. “The problem is, if Sri Mulyani resigns, who will replace her?”
The government scrambled to restore calm. Indrawati denied resignation rumors, while securities regulators relaxed rules on share buybacks and Bank Indonesia assured markets that legal revisions wouldn’t change its existing mandate. Danantara rushed to assuage markets of its plans, people familiar with its response said. Within days the fund unveiled a roster of managers and advisers that included the likes of Dalio, economist Jeffrey Sachs and former Thai Prime Minister Thaksin Shinawatra — even though Dalio later described his role as being in an informal capacity.
Representatives for the Finance Ministry and Danantara didn’t reply to requests for comment.
Behind the scenes, Prabowo’s closest advisers saw the turmoil as symptomatic of a deeper issue — a lax governance culture exacerbated by ministers fearful of confronting Prabowo with bad news. On the one hand, ministers had been allowed too much freedom to run in their own lanes. But Prabowo can also be mercurial and impatient, people around him say, and he has regularly reminded officials and state company executives that they are easily replaceable.
One response was to revamp the State Secretariat, the gatekeeper to the president, by restoring its role in coordinating policy and ensuring alignment with his agenda, according to people familiar with the situation.
“The problem we face now is that ministers are hesitant — even afraid — when it comes to making decisions,” said D. Nicky Fahrizal, a researcher at the Jakarta-based Center for Strategic and International Studies. With Prabowo’s leadership style highly elite-driven and tightly controlled, “not everyone can break into his inner circle.”
During the tumult, Prabowo rated himself a six out of 10, and suggested he had a messaging problem. “I have begun to realize,” he said at a forum in April, hours after the stock market dropped another 9% at the open, “that the communication from the government that I lead is somewhat lacking.” That, he added, was his responsibility.
Markets have been calmer since, helped by dollar weakness and the finance minister’s assurances that Indonesia’s fiscal guardrails are intact. The nation’s equity benchmark even rose to an all-time high Thursday, joining peers around the world as investors eyed Prabowo’s impending budget. Talk of an early cabinet reshuffle has quieted. Programs are moving forward, if not at the breakneck pace that was promised. The free meals program has reached some 15 million people, well short of its end-year goal of 83 million. Danantara has drawn professionals to its ranks and made pitches in the world’s financial hubs, but has yet to unveil concrete investments.
“On paper, his ideas can make sense,” said Brasukra Gumilang Sudjana, country director for Indonesia at corporate advisory firm Vriens & Partners, citing Danantara’s ability to win investment pledges from countries including Qatar and Russia. “But I also think he underestimated the impact of his fiscal reallocations on the real economy.”
Uphill Climb
Indonesia’s economy, which some forecast to be among the world’s largest within a generation, hasn’t expanded much beyond 5% for the past decade. A key question is whether Prabowo can achieve what Deng did for China, where growth regularly exceeded 8% during its boom years. At current growth rates, the Southeast Asian country’s ambition to reach high-income status risks falling more than a decade behind schedule, putting it further behind global peers in competitiveness, technology adoption and capital investment, according to a recent McKinsey & Co. report. Without major reforms to labor laws, tax collection, education and regulation, economists say Indonesia risks stagnating below its potential — regardless of how much the state spends.
In the short term, Prabowo’s ambitious moves are unlikely to quickly reverse Indonesia’s tepid growth, analysts say. And yet that might not affect his ability to win reelection.
“He doesn’t need economic breakthroughs to get reelected in 2029,” said Marcus Mietzner, an associate professor at Australian National University, pointing to the experience of Prabowo’s predecessor that suggested voters care more about low prices, modest delivery of social welfare and a gradual improvement of infrastructure. If Prabowo achieves that much, he added, “he should be fine for 2029.”
He may achieve more, analysts say, if he can focus as much on executing projects as he does on starting them. That will require a shift on multiple fronts — empowering ministers to do their jobs, refocusing resources on realistic projects and pursuing unexciting but impactful reforms that could ultimately help Danantara and local industry win funding from global investors.
In a world of Trump’s tariffs, he has already shown an ability to shift course. Prabowo negotiated a conclusion to his country’s months-long tariffs talks with the US in a 17-minute phone call with President Donald Trump. He recently advanced a trade deal with the European Union — already a decade in the making — just days after attending Indonesia’s first BRICS summit in Brazil since joining the bloc. To secure a deal with Trump, he promised to knock down long-entrenched non-tariff barriers and ease cumbersome business regulations.
It remains to be seen whether he can continue to shift as the world around him does, or whether he can pivot if his biggest programs continue to fall short of his expectations. He has expressed admiration for the quality in Deng. “He was known as a very practical man who didn’t rely too much on textbook theories, but was able to make quick decisions in the field,” Prabowo wrote of the late Chinese leader’s military career.
But the system Deng created was, above all else, stable and predictable, something that attracted foreign investment and helped drive China’s economic miracle. So far, this predictability is hard to discern under Prabowo, and will be a critical measure by which investors judge his policies.
“Prabowo is the kind of leader who talks very big,” said Siwage Negara, senior fellow at Singapore’s ISEAS-Yusof Ishak Institute and former economic consultant to the World Bank. “But in terms of reality, he has to look at the real capacity. He has to be more realistic.”