September 2, 2025 | 04:37 pm
TEMPO.CO, Jakarta - Researcher at the Centre for Strategic and International Studies (CSIS), Deni Friawan, has cautioned that Indonesia risks sliding into an economic crisis if the government fails to address the root causes of the ongoing demonstrations.
According to Deni, the protests stem from a deep crisis of public trust driven by the collapse of fiscal legitimacy. To restore confidence, he argued, the government must show empathy and set an example.
“Stop budgetary wastage, end elite privileges, and stop denying the deteriorating economic position,” Deni said during a media briefing titled “Wake Up Call from the Streets: Our Democracy and Economy Test” at the CSIS office in Central Jakarta on Tuesday, September 2, 2025.
He stressed that without urgent reforms, the cycle of unrest could persist. History, Deni noted, has shown that unchecked inequality, corruption, and weak law enforcement have the potential to trigger multidimensional crises, as seen during the Asian Financial Crisis in 1997–1998.
Deni further warned that prolonged protests could dampen growth. “People will be reluctant to consume, reluctant to invest, exports will be disrupted, layoffs will increase, and it will spiral downward, making the situation even worse,” he said.
In response to the public backlash, President Prabowo Subianto announced that all political parties in the House of Representatives (DPR) had agreed to revoke the controversial allowance policy for lawmakers and impose a moratorium on official overseas trips.
He added that party leaders had already sanctioned legislators who made misleading remarks.
Prabowo reiterated that the government respects freedom of expression but stressed it must remain within legal boundaries.
“I have instructed the Police and Military to take the strictest possible action against all forms of destruction of public facilities, looting of homes or public spaces, and attacks on economic centers, in accordance with the law,” Prabowo said at Merdeka Palace on Sunday, August 31, 2025.
Economic Indicators Still Solid, Government Says
Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto sought to reassure the public, claiming that Indonesia’s economic fundamentals remain strong despite the protests.
Airlangga highlighted several indicators: economic growth in the second quarter of 2025 reached 5.12 percent year-on-year; the Manufacturing PMI returned to expansion at 51.5 in August after four months of contraction; and the rupiah exchange rate stayed stable at Rp16,490 per US dollar as of August 29, 2025.
He also pointed to robust domestic consumption, with mobility and retail activity on the rise. “The government believes the social-political turbulence will have only a short-term impact. We remain optimistic about medium- and long-term growth,” Airlangga said during a press conference at the Indonesia Stock Exchange on Monday, September 1, 2025.
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