Indonesia’s political economy at a crossroads: Growth, power, and the limits of developmental pragmatism

This opinion article argues that the central problem in Indonesia’s contemporary political economy is not the absence of growth but the political organization of growth. Indonesia entered the Prabowo era with enviable macroeconomic resilience: output expanded by 5.11% in 2025, poverty and inequality both declined, unemployment remained below 5%, and Bank Indonesia maintained the policy rate at 4.75% while continuing to frame inflation and external stability as manageable. However, these achievements coexist with enduring weaknesses in the rule of law, corruption control, democratic accountability, tax capacity, and market contestability. In my view, Indonesia’s greatest risk is not a sudden collapse but developmental stagnation disguised as success: respectable headline growth resting on concentrated power, commodity-centered industrialization, and discretionary state activism. The continuity from Jokowi’s developmentalism to Prabowo’s more assertive state activism is real, but continuity alone will not deliver inclusive prosperity. Indonesia does not need a retreat from industrial or social policy but a more democratic and rule-bound version of both. This means linking downstreaming to productivity and innovation, expanding services-sector competitiveness, strengthening the tax state, and rebuilding institutions that can discipline rent-seeking without paralyzing development.