What policies to expect from Indonesia's new President Prabowo

JAKARTA: Retired General Prabowo Subianto will be sworn in on Sunday (Oct 20) as the president of Indonesia, the world's third-biggest democracy with the largest economy in Southeast Asia.

The following is a summary of Prabowo's policy pledges:

BOOSTING GROWTH

Prabowo has set a target to accelerate economic growth to 8%, from 5% now, by developing industries that process Indonesia's rich natural resources and relying on the economic impact of his flagship programmes, such as giving students free school meals.

Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.

Prabowo, currently defence minister, also plans to raise funds by selling carbon credits overseas to fund green projects that will create jobs, an adviser told Reuters.

ENERGY & FOOD SECURITY

Central in Prabowo's campaign pledge was to make Indonesia self-sufficient in production of staples, as well as to cut the country's reliance of fuel imports.

In his current role as defence minister, he oversaw the "Food Estate" project, clearing swamps to make way for cassava planting.

This project will be expanded, creating three million hectares (7.4 million acres) to cultivate rice, corn and soybeans. That is roughly the size of Belgium.

Some of the agriculture products will be made into bioethanol.

Prabowo has also made preparations to increase the mandatory blending of palm oil-based biodiesel to 50% by next year, up from currently 35%, to reduce gasoil imports. Indonesia is the world's biggest producer of palm oil.

FREE, NUTRITIOUS SCHOOL MEALS

Prabowo's most well-known campaign promise is the $28 billion "Free Nutritious Meals" programme providing food for 83 million children and pregnant women to fight stunted child growth.

Considered by some economists as costly, the programme has sparked concerns from rating agencies and investors that the new government would move away from the prudent fiscal management seen under his predecessor.

Prabowo and his aides have pledged to manage the government's budget responsibly, defending the programme as necessary for long-term human development. The programme would be rolled out in stages starting from January, 2025.

TAX POLICY

Prabowo has set a target to increase government revenue-to-GDP ratio to 23% from about 12%, promising to do so using improved technology and without raising tax rates.

During campaigning, he said he was considering setting up a new tax collection agency modelled on the U.S. Internal Revenue Service, but it was unclear if this would be pursued.

The former special forces commander would review the possibility of lowering corporate income tax to 20% from 22%, according to media reports citing his adviser, though this would depend on its impact on revenues.

It also remains to be seen whether Prabowo would raise the value-added tax (VAT) rate to 12% from 11% on Jan. 1, 2025, an unpopular plan that has been set in motion by the current administration.

FUTURE OF NEW CAPITAL CITY

Outgoing leader Widodo has made the $32 billion project to move Indonesia's capital 1,200 km (745 miles) away from sinking Jakarta to Nusantara, on Borneo island, his main legacy project.

Prabowo has publicly said he would continue building the city, even as he acknowledged the project might take years to complete.

However, members of Prabowo's coalition have privately raised doubts about the capacity of the state budget to fund both the new capital and the nutrition programme, sources told Reuters.

FOREIGN POLICY

Prabowo has said his presidency will continue Jakarta's long-held foreign policy of non-alignment, promising to maintain good ties with world powers without choosing sides.

In a sign he will be more active on the global stage, Prabowo has travelled extensively since winning the election, meeting leaders from countries like Australia, China, France, Japan, Russia and neighbouring nations in Southeast Asia.

Last year, at a gathering of security officials from many countries, Prabowo as Indonesia's defence minister proposed a peace plan to end the war in Ukraine.

Months later, he took swipe at the European Union's deforestation rules, saying Europeans forced Indonesians to cut down forests when Indonesia was a Dutch colony, in a seminar explaining his foreign policy stance.

Read the latest news here