clients on the new cabinet of Indonesian President Prabowo Subianto.

Context

  • Prabowo Subianto — sworn in as Indonesia’s new president on October 20 — began his term by appointing the country’s largest cabinet since 1966. The “red and white cabinet” comprises 109 members, including 48 ministers, five agency heads and 56 vice ministers. Twenty-four ministries have been newly established or emerged from splits, marking the most significant shake-up of the executive branch in decades. Some changes reflect a greater focus in certain areas, while others accommodate power-sharing arrangements. As previously noted, the consolidation of portfolios will dominate the government’s attention, surpassing any specific policy priority during the first semester.
  • Prabowo’s appointments reflect his commitment to political inclusivity and power-sharing. His Cabinet draws from nearly all parties and a wide range of interest groups, including businesses, taking the “big tent” approach of post-Soeharto governments to a new height. This broad inclusivity, however, points to continuity in policymaking approaches. Approximately 56 percent of the Cabinet members are politicians, 16 percent professionals, 8 percent from the military or police, 7 percent business figures and 6 percent academics. Nevertheless, social diversity is a genuine concern, with only 13 women and limited inclusion of ethnic and religious minorities.

Significance

  • Prabowo’s Cabinet includes a surprisingly large number of ministers who served in the previous government, defying expectations of a clearer break from former President Joko “Jokowi” Widodo. Seventeen of 53 ministerial-level officials served in the Jokowi administration, with 13 continuing in their roles. This mix of continuity and new appointments reflects both political bargaining and relationships built during the previous government. The roles of these ministers may shift as they navigate Prabowo’s leadership, but their policies and policymaking styles are expected to remain similar.
  • It remains unclear who will take on the role of cross-sectoral investment troubleshooter in Prabowo’s administration. The disbandment of the Coordinating Ministry of Maritime and Investment Affairs, combined with the absence of a politically strong and business-savvy figure like Luhut Pandjaitan, leaves a gap in Prabowo’s inner circle. Although the well-regarded minister of investment and downstreaming, Rosan Roeslani, is nominally responsible for this role, he is expected to have much less influence compared to Luhut under Jokowi.

Implications

  • Market reactions to the Cabinet have been positive, with a stronger rupiah and steady if modest gains in the Indonesia Stock Exchange. This streak has continued since last week’s sneak preview of cabinet appointees. Finance industry sources are particularly pleased with policy continuity in key portfolios, including in the ministries of State-Owned Enterprises, Energy and Mineral Resources and Investment. The most welcome surprise, however, has been the retention of Sri Mulyani Indrawati as finance minister. “Business as usual” best describes the current market sentiment.
  • Businesses should prepare for months of uncertainty — a reality officials also face — as the new Cabinet takes shape. Although the Cabinet structure is now clear, the division of labor within and between ministries — let alone policy priorities — is still ambiguous. Bureaucratic units will see splits and rotations among their ranks, and some ministries may lack an office in the short term. Companies affected by administrative changes should adopt a cautious, observant stance until the situation becomes clearer, especially when seeking to reestablish relationships within the government.

We will continue to keep you updated on developments in Indonesia as they occur. If you have any comments or questions, please contact BGA Indonesia Managing Director Douglas Ramage at dramage@bowergroupasia.com.

Best regards,

BGA Indonesia Team

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Managing Director

Doug is the founding managing director of BowerGroupAsia Indonesia in Jakarta. He is one of the foremost experts on Indonesia’s political economy, business and regulatory affairs, with over 30 years’ experience living and working in the country. In addition to his role at BGA, Doug serves as chair of the American Chamber of Commerce (AmCham) in Indonesia, the country’s largest international business association.  Doug works closely with multinational companies and the government to find solutions to policies that impact Indonesia’s competitiveness, foreign investment opportunities and market access. He is skilled at leading teams to develop commercially strategic advocacy efforts that ... Read More