Prabowo's inner circle spooks markets as Indonesia swings from darling to laggard

Summary

Prabowo Subianto's economic management is unsettling markets. A Bloomberg investigation describes an opaque inner circle — ex-military colleagues, family and ad-hoc advisers — whose erratic, poorly communicated decisions have produced a "crisis of confidence", swinging Indonesia from emerging-market darling to global laggard. The rupiah breached 18,000/USD for the first time; a palace session in which Prabowo and ministers did breathing exercises with motivational speaker Tony Robbins, celebrating his free-meals programme, crystallised elite unease. The president rejects the "hostile to investors" framing, points to a new acceleration task force (P2SP) to clear bottlenecks, and his spokesman touts Rp2,430tn in pledged investment from foreign trips. But analysts say rate hikes alone will not restore confidence; the state wealth fund Danantara priced its first dollar bond into a wary market.

By the numbers

• 18,000 — rupiah/USD level breached for the first time.
• Rp2,430tn — investment pledges the palace attributes to Prabowo's foreign visits.
• P2SP — new Strategic Program Acceleration Task Force to clear licensing bottlenecks.
• Darling → laggard — Bloomberg's framing of Indonesia's 2026 reversal.

Why it matters

Indonesia is Southeast Asia's largest economy; capital flight and a sliding rupiah raise import-cost and debt-service pressure and test central-bank credibility. The doubt is about process — who decides, and how — as much as policy, making it harder to reassure investors with single measures.

What to watch

• Bank Indonesia's rate path and FX intervention as the rupiah tests new lows.
• Whether Prabowo formalises and clarifies his economic decision-making.
• Danantara fund-raising and foreign-direct-investment realisation vs. pledges.