Navigating Prabowo’s Red White Cabinet?? | Vero Advocacy

Key Insights:

• Prabowo's Cabinet has over 100 members, re-appointment of incumbents illustrates continuity??

• Large cabinet requires government engagement to be precise and tactical?

• Finance Minister to report directly to the President?

• Prabowo is seen as consolidating political capital over the next year?

Prabowo Subianto, 73, was sworn in as Indonesia’s eighth president on October 20 and appointed a 109-member cabinet, the largest since the Suharto government in 1998. About a third of cabinet ministers, particularly those with economic-related portfolios, were reappointed from Jokowi’s administration, reflecting policy continuity, particularly for ongoing infrastructure projects and welfare programs.???

The president defended the size of his seven-party coalition's cabinet, saying it would unite the multicultural nation by representing a wide range of political views.??

Former World Bank managing director Sri Mulyani was renamed Finance Minister, marking her third term with the portfolio under three presidents. She is seen by investors as a steady hand amid global volatility. Other retentions included industry, energy, state-owned enterprises, investment, and economic affairs. These key ministerial portfolios will be crucial in implementing Prabowo’s policy initiatives, including energy self-sufficiency, growth, combating poverty and corruption, and the flagship Free Nutritious Meals program, which aims to provide free lunches for school children.??

Among his first decrees after taking office was to order the finance minister to report directly to the president instead of the coordinating minister for economic affairs. This move signals his intention to work closely with Sri Mulyani to see his ambitious policies through.??

Observations and Analysis

Like his predecessor, Prabowo is expected to take about a year to consolidate control as the dust settles after elections. The make-up of the first cabinet is a clear nod to Jokowi’s tacit support of Prabowo’s run. It allows the president to begin governing and strengthen his political machine after a smooth transition.??

The reappointment of incumbents also lowers the risk of disagreements and tension between the two camps. A large cabinet, however, could lengthen policy decisions and increase bureaucracy through overlapping or unclear jurisdictions. Government engagement should be carefully designed, precise and targeted.??

The Future with PDIP?

The absence of the parliament’s largest party, the Indonesian Democratic Party of Struggle (PDIP), from the government may appear to be a challenge. PDIP broke ties with Jokowi, who was a party member when he did not back its presidential candidate, while his son Gibran Raka joined Prabowo’s ticket. PDIP controls a fifth of the legislative assembly with 110 seats, while Prabowo’s vehicle Gerindra is the third-largest with 86 seats in the 580-member chamber.??

However, the party has not made clear whether it will be in the opposition and has also said it would support the government in parliament.??

Other signals, including critical cabinet members, indicate a path towards partnership. Sri Mulyani and Budi Gunawan, Coordinating Minister for Political and Security Affairs, are figures seen as close to PDIP Chairwoman Megawati.??

Without an opposition party in parliament, an unprecedented situation for the country, Prabowo’s legislative agenda would be unchallenged. It would raise fears of unchecked power, democratic backsliding and authoritarian tendencies used to describe Prabowo since he entered politics.??

Government Engagement: Policy Priorities??

Given the post-election context and relationship between political factions, engagement with the government should be carefully timed, designed and implemented. The following are Prabowo’s policy initiatives that will impact industries and decision-making, but also provide space for businesses to engage the public sector.??

The free lunch program, expected to launch in January 2025 and provide meals to 15 million children, is slated to cost upwards of Rp 400 trillion ($25.6 billion) and has already come under fire for potentially straining the budget and state resources. The meals program should be viewed beyond meals and boosting youth nutrition but seen through the framework of Indonesia achieving food self-sufficiency, an issue Prabowo framed as existential in his speech.??

Collaboration between the government, the private sector, NGOs, and foreign partners would bring these policies closer to success. Tapping into capabilities such as artificial intelligence and data management would be an advantage. Communicating the importance of collaboration presents an opportunity for businesses to participate in a major policy agenda. Sectors that would benefit from this policy include plantation, consumer goods, logistics, and non-cyclical industries such as food retail and distribution.??

At his inauguration, Prabowo pledged economic growth of 8% annually until the end of his first term in 2029 from the current level of 5%. This would be achieved through foreign investment, growing domestic industries and manufacturing and improving human capital. Businesses in technology, health care, education and infrastructure are likely to receive significant attention, while engagement with the government should highlight benefits to those areas.??