\u201cDevelopments in Indonesia affect Australia indirectly as well, because what happens there will determine\u2014not simply shape or mould but determine\u2014how quickly and peacefully the rest of Southeast Asia can develop.\u201d<\/p>\n
Indonesia has the largest economy in the region and ranks seventh in the world by GDP. Its annual growth rate usually tops five per cent. Financially, it negotiated Covid well<\/a>, though not the present strife, which is multi-factorial.<\/p>\n The current rupiah plunge is lousy for the locals, but great for the tourists \u2013 if they can be found.<\/p>\n Where are the crowds?<\/p>\n Once the Iran War started, the big long-haul jets that bring European holidaymakers to Bali didn\u2019t connect their aerobridges \u2013 64 flights were cancelled<\/a> in the first week of the conflict.<\/p>\n More than 8,000 had to postpone their travel. Most had been booked on routes with layovers in Doha, Abu Dhabi, and Dubai before heading to the US and Europe.<\/p>\n European tourist arrivals are now down by about 800 passengers a day to an island where the economy relies on outside tourism.<\/p>\n What\u2019s gone sour? The Forbes business barometer ranks the rupiah as fifth among the world\u2019s ten weakest currencies. Outraged partisan politicians and local economists have rushed out with excuses and claims of public service debt, but the reasons are complex.<\/p>\n The IPB Uni in Bogor, West Java, is considered one of Indonesia\u2019s top campuses. Germany-trained economist Dr Deniey Adi Purwanto is more lucid than most.<\/p>\n He blames<\/a> \u201cinvestor concerns with the government\u2019s fiscal policy\u201d, particularly the $US 24.5 billion free school meals project already covered by MWM earlier this month.<\/p>\n Indonesia under Prabowo \u2013 a volatile neighbour\u00a0 \u00a0<\/a><\/p>\n<\/p>\n \u201cIndonesia\u2019s dependence on imported goods and services is weakening the rupiah. This causes a current account deficit, which increases the demand for foreign currency to finance imports.\u201d<\/p>\n Capital inflows are supposed to cover deficits. Investors are a skittish lot and flee from economies in turmoil. That pushes down exchange rates \u2013 a sort of self-fulfilling prophecy.<\/p>\n The US reciprocal tariff policy also impacted:<\/p>\n This move triggered global trade tensions and put pressure on Indonesian exports.<\/p>\n However, these are template reasons, largely universal and hitting many other nations. There must be something extra and special for Indonesia to cop the big hit.<\/p>\n The triple whammy curse<\/p>\n There is \u2013 the ancient triple-whammy curse of the Republic, known to every adult as KKN and needing no translation:<\/p>\n Korupsi, Kolusi, Nepotisme.<\/p>\n This is where things get hairy.<\/p>\n The undergraduate line about \u201ca thousand economists laid end to end and never reaching a conclusion\u201d isn\u2019t just a joke, so consumers impacted by fiscal issues need to do thorough research.<\/p>\n The biggest in the business is Morgan Stanley Capital International. The NY-based investment research firm<\/a> \u201cprovides stock indexes, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds.\u201d<\/p>\n It\u2019s the barometer that big money taps to check the fiscal climate. Do they need brollies or sunnies?<\/p>\n MSCI reacted to news that Indonesia\u2019s external debt had risen to just under $US438 billion by thinking aloud about downgrading the country from emerging market to frontier market status.<\/p>\n The stock market heard the muttering and fell nearly seven per cent \u2013 a claimed<\/a> loss of $US80 billion.<\/p>\n Prabowo\u2019s business tycoon younger brother, Hashim Djojohadikusumo, was reported<\/a> as telling the ASEAN Climate Forum at the Jakarta Stock exchange that the government \u201creceived four letters from MSCI highlighting concerns in Indonesia\u2019s capital markets,\u201d adding:<\/p>\n \u201cThe President was extremely angry about what happened, especially because the nation\u2019s honour was at stake and many retail investors suffered losses.<\/p>\n \u201cFor Mr Prabowo, the dignity of the republic is paramount. That\u2019s why he will monitor the capital market very closely.\u201d<\/p>\n That assurance didn\u2019t cheer anyone, even after the exchange CEO \u201cstepped down\u201d (or was escorted down the elevator), along with two senior officials at the Financial Services Authority. The cops were called.<\/p>\n The police said they\u2019d \u201cfrozen bank and securities accounts belonging to several stock brokerage firms worth approximately $US40 million, as part of an investigation into alleged insider trading and market manipulation.\u201d<\/p>\n Fitch cuts Indonesia credit rating outlook to negative<\/a><\/p>\n<\/p>\n Another factor impacting Bali real-estate investment<\/a> in particular is increased (and long overdue) enforcement of often confusing building regulations. It\u2019s meant a significant slowing down of new projects, with one source telling MWM transaction volume is down 40% from a year ago.<\/p>\n Prabowo Inc<\/p>\n The President\u2019s brother, Hashim, is not in the Cabinet but is accepted as a spokesman for his big Bro. He\u2019s also known as<\/a> \u201cthe principal financial backer of both Prabowo\u2019s political ambitions and business ventures.\u201d<\/p>\n Family ties don\u2019t stop with siblings. Last year, Prabowo appointed his nephew, Thomas Djiwandono, as Deputy Minister of Finance, and this year, he nominated him as Deputy Governor of the Bank of Indonesia.<\/p>\n The market men put their hands in pockets, jangled their keys, and stared<\/a> at the ceiling, wondering \u201cwhat the move may signal about the exercise of political influence over monetary policy.\u201d<\/p>\n Thomas\u2019 elected younger brother, Budisastro Djiwandono, was given oversight of foreign affairs<\/a>, accompanying Prabowo on overseas trips. Two other nephews, a niece, and an ex-wife are also in positions of power.<\/p>\n Commented<\/a> the Asia Sentinel business magazine: \u201cThe pace and scale of this expansion \u2026 have prompted warnings from civil society groups that Indonesia may be entering a period in which political power and commercial influence<\/p>\n are becoming dangerously intertwined within the president\u2019s own family.<\/p>\n The Suharto playbook<\/p>\n \u201cNine billion dollars of Soeharto money was transferred from Switzerland to a nominee bank account in Vienna. Not bad for a man whose presidential salary was $1,764 a month when he left office.\u201d<\/p>\n Now he\u2019s been made a national hero<\/a> by his former son-in-law.<\/p>\n Together, these issues are extra factors in the rupiah\u2019s fall by failing to create a cushioning aura of trust and making foreign investors feel comfy.<\/p>\n Police investigations into the stock exchange scandal are apparently continuing, with reports of 70 people being interviewed. Prabowo getting angry about his nation\u2019s honour and reputation hasn\u2019t helped police with their inquiries.<\/p>\n Before he took office, Prabowo railed against graft and promised reform. Last year, he gave a desk-thumper<\/a> from the throne:<\/p>\n \u201cOn behalf of the Indonesian people, I warn all elements in all institutions: immediately correct yourselves, immediately transform yourselves, because the state will take action.<\/p>\n \u201cWe will get rid of those who are not loyal to the country without hesitation, without favouritism, regardless of family ties, political party, or ethnicity \u2026 eradicating corruption will be a priority agenda of my administration.\u201d<\/p>\n Although the government\u2019s grip on critics<\/a> is tightening, it hasn\u2019t got to academic throats. Yet.<\/p>\n Commented<\/a> Dr Phil Ridho Al-Hamdi from the Muhammadiyah Uni in Yogyakarta:<\/p>\n \u201cPrabowo\u2019s speech was not much different from his predecessor\u2019s. <\/p>\n The fact is, corruption still occurs everywhere, from the central government to the villages.<\/p>\n \u201cA leader\u2019s speech must be supported by concrete actions, not just rhetoric (and accompany) exemplary behaviour from state officials, from the president and vice president to ministers \u2026 \u2026. anti-corruption demonstrated through daily behaviour.\u201d<\/p>\n If the world is waiting for change in the way Indonesia does business, it will need more than a packed lunch.<\/p>\n![\"AUD](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/04\/AUD-to-IDR-ChatGPT.png\")
<\/p>\n![\"Suharto](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/04\/Suharto-Inc.jpg\")
This was the model of governance used by Prabowo\u2019s former father-in-law, the second President Soeharto. In 1999, Time magazine reported<\/a> a four-month investigation that covered 11 countries, concluding:<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/04\/Duncan-Graham-updated-200x200.jpg\")
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