Recent protests involved the most severe social unrest in decades
Protests in late August and early September represented the most severe social unrest in Indonesia since the late 1990s. They were triggered by public anger over perceived iniquity on the part of the political establishment and rising economic pressures. President Prabowo Subianto’s decision to replace Sri Mulyani Indrawati as finance minister in the wake of the unrest underscores how the fallout is reshaping the country’s governance.
What’s next
The situation will force a reckoning over Indonesia’s governance model, with the state at a crossroads between maintaining democratic accountability and reverting to more authoritarian modes of control. Prabowo’s government will keep striving to restore public confidence in the authorities, but elite infighting and the president’s increasing reliance on the military to maintain law and order suggest that Indonesia could tilt towards illiberal crisis management rather than reform.
Subsidiary Impacts
- Investor confidence will likely remain shaky, with the rupiah under increased pressure.
- Ambitious infrastructure projects may be delayed as funds are diverted to security.
- Minority communities may face scapegoating during any future bouts of unrest.
Analysis
A key trigger for the protests, which broke out on August 25, was an allowance hike for lawmakers that many Indonesians saw as unethical, especially in light of the economic problems facing ordinary people. These problems include unemployment and elevated food prices. The anger over the hike also appeared to augment long-standing frustration over alleged high-level corruption (see INDONESIA: Recent pardons hurt anti-corruption drive – August 12, 2025).
The agitation intensified, and also began to focus on the issue of police brutality, after a motorcycle taxi driver was run over and killed by a police vehicle while caught up in a demonstration on August 28.
As protests turned into riots, there were arson attacks against state buildings and attacks on the homes of top officials. This revived memories of Indonesia’s 1997-98 crisis, when economic collapse and elite instability contributed to the fall of the three-decade ‘New Order’ of dictatorial former President Suharto.
Protesters targeted symbols of elite wealth and state authority
There was also evidence of rival oligarchic factions inciting violent outbursts, exploiting public outrage to serve their own political ends. The combination of elite manipulation of grievances and intensifying public discontent augurs heightened political volatility.
Military factor
The government’s reliance on the armed forces to help restore order has reignited concerns over the military’s creeping political influence (see INDONESIA: Contention over military’s role will rise – March 25, 2025).
Prabowo promised accountability for the driver’s death and said on August 31 that the allowance policy would be revoked. Yet he also said that some of the protest activity showed signs of “treason and terrorism”, and that he had told the police and military to respond firmly against rioters.
Troop deployments across Jakarta and other urban centres indicate that Prabowo sees the military — to which he formerly belonged — as a key pillar of government stability. This potentially undermines the strengthening of civilian institutions since the 1998-99 democratic transition.
Prabowo is also expanding the military’s role in public policy itself. The Constitutional Court today upheld legislative amendments passed in March that increase the scope for military personnel to hold posts in civilian institutions, rejecting challenges to the process involved in the revisions.
The military’s growing role risks undermining democratic institutions
The deployments may ensure short-term calm, but critics say the government prioritises securitisation above addressing the fundamental grievances that sparked the protests. Another criticism is that the government is restricting freedom of expression, although Prabowo insisted that the state respected this as long as it was lawful.
Discontent continues to simmer. However, many civil society activists are seemingly struggling to channel this into structured reform demands.
Indonesia may therefore be at increased risk of a cycle of protests and clampdowns, with the streets as the main arena of contestation.
Governance
By replacing Sri Mulyani as part of his response to the recent turmoil, Prabowo is signalling a shift away from technocratic governance and towards more personalised, patronage-driven rule.
When Prabowo won last year’s presidential election, it was widely expected that Sri Mulyani would not remain finance minister after he took office, given the difference in their outlooks. Many observers were therefore surprised when he appointed her to his cabinet.
Sri Mulyani — a former IMF and World Bank official — commands considerable respect internationally, and her presence in Prabowo’s administration gave reassurance to observers concerned about the president’s ambitious spending plans that Indonesia would abide by fiscal prudence.
However, her approach to economic management made her unpopular with some Indonesians. Indeed, she was among the politicians whose homes were attacked during the riots.
On September 8, as part of a wider cabinet reshuffle, Prabowo replaced Sri Mulyani with Purbaya Yudhi Sadewa, who left his position as head of the Indonesia Deposit Insurance Corporation to take up his new post. The president’s move was a concession to political rivals and certain critics among the general public but also sparked market panic, causing the rupiah to slide.
If Purbaya fails to keep the economy on a solid footing, public grievances could worsen. If this in turn prompts further unrest, Indonesia may struggle to maintain its appeal as a destination for foreign investment. The government will count on a stimulus package that it unveiled on September 15 to provide at least a short-term economic boost.
The president appears inclined towards centralised control
Prabowo appears inclined towards a model of governance based on centralised control — an approach that may be a result of his years as a general.
Moreover, the crisis has underscored the limits of Indonesia’s checks on executive power. Parliamentary oversight remains muted, with all the parties in the main legislative chamber either part of Prabowo’s coalition or supportive of it in some way.
The willingness of elites to mobilise popular anger for factional advantage underscores the shakiness of the consensus within the political establishment.
Nevertheless, in any future unrest during his presidency, Prabowo may feel emboldened to double down on coercive measures. Over time, this could erode Indonesia’s reputation as a relatively stable democracy in South-east Asia.
The recent violence certainly weakens Jakarta’s ability to project itself as a regional leader. ASEAN partners and major powers alike will be keen to see whether the government responds with reform or repression. A tilt towards militarisation would likely strain ties with Western partners, although this would probably give China greater room to expand its influence in the country, especially as Beijing is largely indifferent to its partners’ governance systems.
Restoring confidence in the state among Indonesians — and avoiding further episodes akin to the recent upheaval — may hinge on whether Prabowo’s administration can demonstrate its commitment to safeguarding democratic institutions and curbing corruption.
