Building economic sovereignty in a more uncertain world

By Sachin V Gopalan, CEO of Indonesia Economic Forum

Indonesia under President Prabowo Subianto increasingly appears to be entering a new phase of national development – ​​one that places greater emphasis on economic sovereignty, strategic resilience and long-term national consolidation.

At first glance, many recent policy developments may seem disconnected: tighter oversight of commodity exports, regulations on coal and palm oil, stricter foreign exchange controls, anti-corruption investigations, increased diplomacy abroad, and greater state attention to strategic industries. But taken together, they increasingly look like parts of a broader national strategy.

The central idea seems clear: Indonesia must become economically stronger, more self-reliant and more resilient in an increasingly uncertain global environment.

Over the past two decades, Indonesia has benefited greatly from globalization, investment flows and market-led growth. Under President Joko Widodo, the country has successfully accelerated infrastructure development and downstream industrialization, particularly in sectors such as nickel and mineral processing. President Prabowo now appears to be building on this foundation – but with a broader vision.

The emerging model is no longer simply about producing more, but about ensuring that Indonesia derives more value from its own resources, financial flows and strategic industries.

This explains why the government is increasingly focusing on export earnings, commodity trading systems and reducing leakage through underinvoicing or withholding capital abroad. Officially, these measures aim to maximize national benefits from Indonesia’s vast natural resources.

In many ways, this reflects a global trend.

Governments around the world are becoming increasingly interventionist and strategic. The United States is relocating its industries. Europe is strengthening its industrial policy. China has long operated with a strong, state-led economic framework. Resource-rich countries are increasingly asking how national wealth can translate into greater national economic resilience.

Indonesia is now asking the same question. And undoubtedly, there are good reasons to do so. The country simultaneously faces enormous development ambitions:

• food and energy security,

• defense modernization,

• industrial modernization,

• digital transformation,

• the expansion of infrastructure,

• and large-scale social programs such as the MBG (Free Nutritious Meals Program).

These ambitions require not only political leadership, but also sustainable fiscal capacity. Rather than relying excessively on debt or large tax increases, Indonesia appears to be seeking to further optimize its own resource economy and domestic flow of capital. This is not necessarily anti-market. Rather, it reflects an attempt to create a more balanced relationship between markets and national strategic interests.

Of course, transitions of this magnitude naturally give rise to adjustment problems within businesses and financial markets. Investors generally do not oppose state intervention itself, particularly in strategic sectors. What markets are looking for most is clarity, predictability and consistency of implementation. The challenge for government is therefore not just to design policy, but also to clearly communicate the directions and ensure that execution remains stable and transparent.

Encouragingly, Indonesia’s macroeconomic fundamentals remain relatively resilient despite global volatility. Although markets have demonstrated periods of caution, this reflects broader international uncertainty as much as domestic adjustment.

It is important to note that President Prabowo’s approach does not appear to be inward-looking. Rather, its intensive diplomacy abroad suggests that Indonesia is actively positioning itself in a rapidly changing global order. Different partnerships appear to serve different strategic objectives.

Europe for cooperation on technology and critical minerals.

The Middle East for food security and sovereign investment.

India for digital public infrastructure and technology collaboration.

China for industrial manufacturing and investments.

Western partners and the United States for geopolitical balance and access to markets.

Rather than aligning exclusively with a single bloc, Indonesia appears to be strengthening its relationships among all major power centers simultaneously. This reflects Indonesia’s long tradition of independent foreign policy, but adapted to a much more fragmented and competitive global economy.

At the national level, the administration also faces an equally important challenge: maintaining social optimism during economic transformation. Indonesia’s young population remains one of its greatest strengths. But young societies also need visible pathways to opportunity, mobility and participation. This is why job quality, entrepreneurship, industrial growth and digital inclusion will become increasingly important in the years to come.

Cases involving prominent public figures and business leaders inevitably generate intense public debate because they often symbolize broader national debates around meritocracy, governance and accountability. But it also reflects something positive: Indonesian society is increasingly engaged, more politically aware, and more invested in issues of institutional integrity and economic fairness. This in itself is part of democratic maturity.

Ultimately, what Indonesia is experiencing today is not a crisis, but a recalibration. The country is seeking a new balance between openness and sovereignty, between markets and national priorities, between growth and resilience.

The opportunity is significant. If managed well, Indonesia could emerge with greater industrial depth, better resource governance, greater economic resilience, stronger fiscal capacity and broader national participation in growth.

The coming years will therefore not simply determine Indonesia’s economic trajectory. They could define the next stage of Indonesia’s national identity itself – as a country seeking not only growth, but also long-term strategic strength and economic dignity in an increasingly uncertain world.