Indonesia's Prabowo Has The Chance To Turn Looming Economic Storm Into Opportunity

Dark clouds are gathering as a result of Trump tariffs and domestic policies, but measures such as deregulation could help alleviate the gloom.

- Ravi Velloor

Nearly three decades ago, East Asia entered two years of the most severe economic contagion, triggered by the collapse of South Korea's Hanbo Steel and a few months later, the massive devaluation of the Thai baht.

The chain of events accelerated with the July 1997 Thai devaluation, sweeping across South-east Asia. It ravaged Malaysia and, particularly, Indonesia. Thousands of businesses shut down and millions went out of work as the Asian financial crisis spread.

Politically, it caused the collapse of the long-serving regime of president Suharto - current President Prabowo Subianto's late father-in-law.

Eastern Asia is possibly at the early stages of a different kind of crisis now - a geoeconomic one - and Indonesia, as Asean's largest economy, has special responsibility to see that nothing it does worsens matters for itself, and South-east Asia.

STORM CLOUDS

The signs are not at all propitious. I have been to Indonesia four times in 2025, and except for Bali, which is enjoying a well-deserved tourism boom after the dismal years of the Covid-19 pandemic, much of the feedback from well-connected Indonesians in the Javanese heartland is disturbing.

The talk in Jakarta is of silent layoffs in manufacturing industries as the China juggernaut sweeps in - even makers of traditional batik, that icon of Indonesian culture, are feeling the pressure of Chinese competition.

More recently, I was told that the Trump administration's squeeze on the Chinese economy has not only hurt the mainland, but is radiating outwards, including to Indonesia. Two key Indonesian commodity exports - coal and nickel - are already suffering. More is to come, and people see things coming to a head by year-end.