In terms of self-destruction and foolishness, there are other countries — and then, there is Indonesia.
As the world scrambles to respond to US President Donald Trump’s renewed tariff aggression, which threatens to dismantle the post-war global trade architecture, nations have responded in three general ways.
You can retaliate with equivalent tariffs and stand your ground—like China, which responded to Trump’s initial tariffs with mirror measures, defending its interests while preserving domestic production.
You can quietly comply—like Vietnam, which has positioned itself as an alternative supply chain base for US firms fleeing Chinese tariffs, erasing obstacles for US imports and gaining investment in return.
Or you can take the moral high ground—like Singapore’s Prime Minister Lawrence Wong, who publicly condemned Trump’s economic nationalism while preparing his citizens for long-term resilience in the face of uncertainty.
And then there is Indonesia, led by President Prabowo Subianto, whose response is not only baffling, but borders on tragicomedy. To counter the looming global trade war, Prabowo has proposed three measures: expanding the controversial free meal program, deepening the downstreaming of extractive industries like nickel, and maximizing Indonesia’s participation in BRICS.
It’s difficult to overstate how detached from reality these proposals are.
First, this is not a future threat—it is an ongoing, immediate crisis. The Indonesian rupiah has plummeted to more than IDR 17,000 per U.S. dollar, the weakest level since the 1998 Asian financial crisis. The Jakarta Composite Index (JCI) has fallen by over 8% in Q1 of 2025, wiping out billions in market value. Inflation is climbing, and investor confidence is evaporating. In this context, Prabowo’s proposals offer no immediate fix. As the great British economist John Maynard Keynes once said, “In the long run, we are all dead.”
The free meal program, now in its pilot phase, is a costly populist gesture. While noble in its intention, it has minimal economic multiplier effect. It does not create jobs, boost industry, or shield the economy from external shocks. Worse, it is poorly targeted—many of the beneficiaries are children from middle-class families who do not need state support.
Then there’s the downstreaming of the nickel industry—a policy initiated under former President Joko Widodo. In theory, it was meant to capture more value from Indonesia’s vast mineral resources. In practice, it has brought environmental degradation, displaced local communities, and failed to generate significant employment for Indonesians. The Chinese control the smelters, own the investments, and employ their own laborers. Indonesia reaps scraps while bearing the long-term costs.
And BRICS? Indonesia’s recent accession is little more than symbolism at this stage. BRICS remains a fragmented and loosely coordinated bloc, plagued by internal contradictions. It offers no mechanism to protect members from the kind of tariff warfare now unfolding. Expecting BRICS to deliver short-term trade salvation is delusional.
Worse still is the announcement that Indonesia will form a special team to negotiate directly with Donald Trump. But let’s ask: Do we have a lobbying network in Washington capable of giving us direct access to Trump? Do we have bargaining chips? What can we possibly offer that would sway a transactional leader whose entire worldview is zero-sum?
Moreover, Indonesia has had no ambassador to the US since 2023 — an astonishing two-year diplomatic vacuum in our relations with the world’s largest economy. And we expect to conduct high-level trade negotiations in this vacuum?
The current trajectory is not just incompetent—it’s dangerous. Without a serious strategy, Indonesia risks becoming collateral damage in a global economic realignment. Instead of flimsy populist programs and vague geopolitical alignments, President Prabowo must adopt seven bold steps—decisive, actionable policies that can insulate Indonesia from the coming storm and place the country on more resilient economic footing.
1. Establish a National Trade Resilience Task Force
Indonesia needs a permanent, cross-sectoral task force composed of economic planners, trade negotiators, technocrats, and industry leaders. This body must operate above political interference and be given executive authority to craft responses to global trade shifts. It must coordinate real-time intelligence on tariffs, supply chain disruptions, and capital flight, enabling preemptive—not reactive—policy.
2. Reindustrialize with Urgency and Focus
Indonesia must shift from resource dependency to value-added manufacturing. The country should immediately develop tax incentives, infrastructure packages, and low-interest credit lines for labor-intensive, export-oriented industries—especially in textiles, food processing, electronics assembly, and green technology. Learning from Vietnam’s success, Indonesia must build industrial parks that attract multinationals seeking non-China supply chains, making itself indispensable in global manufacturing.
3. Launch a Bilateral Trade Offensive
Waiting for multilateral forums like BRICS or the WTO to act is futile. Indonesia must aggressively pursue bilateral trade agreements with key partners: the U.S., EU, India, Australia, and Japan. To do this credibly, we must immediately appoint seasoned ambassadors, build lobbying capacity, and align our standards with international norms. Our current absence of trade diplomats in key capitals is economic malpractice.
4. Reform Logistics and Ports to Cut Export Costs
Export competitiveness is crippled by inefficient ports and archaic logistics. It costs up to 30% more to export a container from Jakarta than from Bangkok or Ho Chi Minh City. The government must reform port administration, adopt digital tracking systems, and break monopolies in domestic shipping. If Indonesia can reduce export costs by even 10%, it will significantly improve its ability to withstand tariff wars.
5. Develop Strategic Commodity Reserves and Hedging Mechanisms
Indonesia must not remain exposed to price shocks in food, fuel, and essential imports. The country needs strategic reserves of rice, wheat, oil, and fertilizers. Additionally, a state-backed sovereign wealth vehicle must be equipped to hedge against currency risks, similar to Singapore’s GIC or Malaysia’s Khazanah. These reserves will offer critical buffers when trade disruptions strike.
6. Reevaluate and Reform Danantara Indonesia Sovereign Wealth Fund
The recent establishment of Danantara Indonesia, a sovereign wealth fund aimed at managing over $900 billion in assets, has raised significant concerns regarding transparency, governance, and economic rationale. Critics argue that, unlike traditional sovereign wealth funds with clear macroeconomic objectives, Danantara appears to lack a defined economic rationale, resembling more of a “trophy fund.”
Furthermore, the fund’s governance structure has been questioned, with fears of potential mismanagement and corruption, drawing parallels to Malaysia’s 1MDB scandal. To ensure that Danantara contributes positively to Indonesia’s economic resilience, it is imperative to implement stringent oversight mechanisms, ensure transparency akin to public companies, and appoint an independent, conflict-free board of directors.
7. Address the Legitimacy of Jokowi and Renegotiate National Debt
Indonesia’s economic future is chained to the reckless fiscal policies of the previous administration under Joko Widodo. Between 2014 and 2024, Jokowi’s government borrowed over IDR 7,800 trillion (approx. USD 500 billion), a staggering figure with little to show in terms of productive infrastructure or systemic reform. A significant portion of this debt was funneled into politically motivated, white-elephant projects such as the new capital city (IKN) in East Kalimantan—projects that are now abandoned, stalled, or burdening state finances without real returns.
Even more troubling is the question of legitimacy. Mounting evidence suggests that Jokowi ran for office using falsified academic credentials—a violation that could invalidate his presidency retroactively. Legal scholars and civil society watchdogs have been raising alarms, demanding that the Prabowo administration investigate these claims and initiate a constitutional review.
If Jokowi is legally declared an illegitimate president, it would open a strategic and legal window for Indonesia to challenge the debts incurred under his administration. Just as Argentina has renegotiated its sovereign debt multiple times citing odious or illegitimate debt doctrine, Indonesia could do the same. This would allow the state to either reschedule repayments, demand significant discounts, or in extreme cases, refuse payment entirely—freeing up hundreds of trillions of rupiah that could be redirected to social protection, education, or industrial development.
This move would require international legal finesse and political courage, but the alternative is far worse: generational debt slavery to pay for a president’s vanity projects and misrule.
A Time for Courage, Not Cowardice
Indonesia stands at a historical crossroads. The global economic system that has fueled our exports and development since the 1990s is unraveling. Trump’s tariffs are not an isolated event—they are a symptom of a global reversion to nationalism, protectionism, and bilateral power politics. The rules-based order has been replaced by a muscle-based one. In this world, only countries with strategic vision and fearless leadership will survive intact.
Prabowo cannot afford to rely on recycled programs, populist giveaways, or vague geopolitical alignments. The country needs structural, urgent, and bold reforms. By executing these seven measures—building a trade task force, reindustrializing the economy, launching bilateral trade offensives, reforming logistics, building commodity buffers, overhauling Danantara, and confronting the ghost of Jokowi’s presidency—Indonesia can not only survive the trade war but emerge as a stronger, more sovereign, and more respected nation.
Now is the time for strategic clarity, legal assertiveness, and economic patriotism. Anything less, and Indonesia risks being not just a victim of the global trade war—but one of its first casualties. Indonesia has a choice: to muddle through with superficial programs that sound good on TV but solve nothing, or to confront the world as it is—unpredictable, zero-sum, and brutal. The global trade war is here. It’s real. And without urgent, courageous leadership, Indonesia will lose—again.
