JAKARTA - The quote "economy for the people, not people for the economy" in the book "Paradoks Indonesia dan Solusinya" written by President Prabowo Subianto explains that with its wealth, Indonesia should be able to become a top-class country, not trapped in a middle-income state. The book briefly explains the "curse" of Indonesia's abundant natural resources, which is believed to stem from Dutch disease.
The term "natural resource curse" was first coined by Richard Auty in 1993 to explain how countries with abundant natural resources are unable to utilize this wealth to boost their economies and how they experience slower economic growth than countries with fewer resources. This discontinuity between natural resource wealth and economic growth can be seen in oil-producing countries. From 1965 to 1998, in OPEC industrialized countries, per capita gross national product growth averaged 1.3%, while in developed countries, per capita growth averaged 2.2%.
"We are a big country. If someone is already strong, please do so. I don't think the government needs to get involved in the cinema industry, for example, or the fried chicken industry, or open coffee shops. But the government must educate young Indonesians who have dropped out of school and are unemployed. For them, the government must intervene boldly. If necessary, from upstream to downstream. These children should be trained, given skills, and supported until they can be productive," wrote Prabowo Subianto, as quoted by VOI from the website prabowosubianto.com.
Dutch Disease
Dutch Disease is an economic phenomenon in which the discovery or massive increase in natural resources leads to the decline of other economic sectors, such as manufacturing and agriculture, through currency appreciation and a decline in overall export competitiveness. This creates dependence on the natural resource sector and has the potential to lead to premature deindustrialization, where the manufacturing industry shrinks prematurely.
The term "Dutch Disease" was first coined by The Economist in 1977, and refers to the weakening of certain economic sectors, particularly manufacturing, due to the boom in other economic sectors, typically based on natural resources or commodity crop production. This anomaly in the Netherlands began in 1959 when the country discovered Europe's largest gas reserves.
This disease also nearly struck Indonesia in the 1970s, during the oil boom. At that time, there were already distinctive signs of Dutch Disease, which, according to Boediono in his book "Indonesian Economics: Across History" (2016), were clearly visible in the composition of GDP and exports.
To overcome this "Curse of Dutch Disease," Prabowo has a solution and strategy. He offers a big push strategy; the state becomes the primary force in accelerating the economy, especially in fulfilling people's needs that the private sector cannot. Prabowo calls this constitutional economics—an economic foundation that is neither fully liberal nor fully socialist. It is a middle-ground economy that balances the economic pendulum collaboratively between the state and the private sector in the market. This idea is not new, but it has successfully triggered the Asian Miracle.
Prabowonomics highlights five key economic policies that Prabowo Subianto will implement as President of Indonesia. The main focus is achieving food and energy self-sufficiency, continuing industrial downstreaming, providing a free nutritious food program, and targeting poverty mitigation through more targeted subsidies. These policies are expected to strengthen economic resilience and improve the public's quality of life.
With these measures, Prabowo is targeting Indonesia's economic growth of up to 8% in the next five years. Downstreaming of natural resources and the development of renewable energy are key to creating jobs and increasing state revenues. President Prabowo emphasized that Indonesia is a wealthy country and that there have been management errors.
Starting from protectionist policies, particularly in the commodities sector, his policy choice is downstreaming. This way, the state will regulate everything from upstream to downstream, hoping to create added value from the supply chain, benefiting the country. Prabowo believes that the downstreaming model will not only benefit foreign exchange but also encourage job creation due to the long supply chain and economies of scale in production when managed domestically.
"Our nation's wealth is extraordinary. The problem is management. Clean management is what this nation needs. The government assets I accumulated at Danantara are worth 1,000 billion dollars. You know that yesterday I eliminated the bonus. I checked, "Tantiem" comes from Dutch, meaning bonus. Why not use simpler language: bonus? The problem is that the company is losing money, but the commissioners are still given bonuses. It's good for you, bad for the people. Cross it out," said President Prabowo Subianto.
Economist Fithra Faisal Hastiadi appreciated the target and stated that it could be achieved with the right strategy. He explained that this achievement would depend on the development of the natural resource processing industry and social programs that have a direct impact on the community. These efforts require support from various sectors to provide real benefits to the community. "In this context, Prabowo must face significant domestic and international challenges," Fithra explained.
"Facing the undesirable consequences of the big push policy, Indonesia needs to accumulate power to create a balance of power. This is relevant to what Prabowo has done as Minister of Defense, by continuing to push for the fulfillment of the minimum essential force (MEF), both through modernizing defense equipment and strengthening the national defense industry," he added.
Two reasons why fulfilling the MEF indicators and strengthening the defense industry are so strategic are: power accumulation will continue to boost Indonesia's bargaining power as a rising power in the global political architecture. Indonesia, as a middle power, will continue to lose if it does not continue to accumulate power in global affairs facing major powers.
According to Fithra, domestic challenges for Prabowonomics include resource management and optimizing various ongoing programs. Meanwhile, international challenges are closely related to efforts to strengthen diplomatic relations and expand trade access.
"First and foremost, domestic challenges involve managing existing resources and programs, while international challenges relate to diplomatic relations and trade," he said.
Palace Summons All Top Businessmen
Several months ago, Prabowo Subianto summoned top businessmen to the State Palace. The meeting was attended by Anthony Salim, Sugianto Kusuma (Aguan), Prayogo Pangestu, Boy Thohir, Franky Widjaja, Dato Sri Tahir, James Riady, and Tommy Winata. Boy Thohir even outlined the topics to be discussed in the meeting with Prabowo. He stated that the businessmen were asked for input on developing the nation.
"Yes, we are all being asked, all parties, be they businessmen, middle-class citizens, or individuals, let's all work together to build the nation," Boy said.
Policy analyst and political communication expert Hendri Satrio believes President Prabowo is likely asking businesspeople to help Indonesia achieve economic independence.
"It seems like Mr. Prabowo is asking these businesspeople to help Indonesia. To help the people make Indonesia more independent. So, at the very least, the money won't be sent abroad but will stay in Indonesia," he said in a written message received by VOI.
Hensat also believes that energy issues and strengthening the textile industry were also discussed at the meeting. Furthermore, the founder of the Kedai KOPI Survey Institute also highlighted the role of the investment management agency Danantara, which was discussed at the meeting. Prabowo likely sought support from businesspeople to invest through Danantara to boost his portfolio and support economic stability.
Ulul Albab, chairman of the Indonesian Muslim Intellectuals Association (ICMI) for East Java, described a cabinet as a large ship. The captain may be great, the sails may be magnificent, but the ship will only reach its destination safely if the crew is complete and understands the direction.
"President Prabowo is preparing the ship. The goal is clear: Golden Indonesia 2045. So, who should be on board? So far, many of the seats have been filled by party representatives. That's natural. Politics is the initial fuel for a journey. But to sail long distances, fuel alone isn't enough. You need a map, a compass, and even a navigator who knows international sea routes well," he concluded.
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