How do you go from free school meals to riots in the streets? To launch what should be the ultimate in popular public policy, good nutrition for children, and yet have a mob looting your finance minister’s home less than a year later is quite a trick. President Prabowo Subianto has managed it nonetheless. It reflects the idiosyncratic way in which he has led Indonesia’s economy and an urgent need to change direction if his country is to escape a looming middle income trap — or a more immediate economic crisis.
The proximate cause of recent unrest in Indonesia, in which at least eight people died and a regional parliament building was set on fire, was public outrage over generous housing allowances for members of parliament. More fundamentally, however, the protesters were venting unhappiness about their own financial situation, including a lack of job opportunities, a squeeze on middle-class incomes and a feeling that the economy benefits a small class of oligarchs and not the common people.
Such complaints are a long-standing feature of Indonesia’s resource-driven economy, which has reached upper middle-income status with GDP of about $5,000 per capita, but is still far from becoming a rich country. Generous public spending ought to be a good palliative for economic discontent and Prabowo’s plans are certainly expansive: as well as spending $28bn a year on free school meals, he aims to launch up to 80,000 village co-operatives, build 3mn affordable houses and grow his $900bn sovereign wealth fund, Danantara.