(Jakarta, 22nd) Affected by the Middle East war, the Indonesian rupiah has repeatedly hit new lows against the US dollar since the end of February, with its decline even surpassing levels seen since the 1998 Asian Financial Crisis. Public opinion holds that Indonesia's current political and economic conditions reveal many similarities with the period before the 1998 riots, raising concerns that the dark history might repeat itself.
The Jakarta Post reported that Indonesian economist Januwa warned that Indonesia is facing a risk of repeating history.
He said that the government’s increasing intervention in the economy, rising debt pressure, and weakening market confidence are all factors that could trigger a crisis. If economic conditions deteriorate, class divisions will intensify, and public anger may shift from dissatisfaction with the government to resentment towards business elites and the wealthy class.
"If the fiscal situation worsens further, especially when the country struggles to fund free lunches, fiscal subsidies, and meet debt obligations, the risk of unrest will increase."
On Wednesday (May 20), Indonesian President Prabowo delivered a speech in parliament on the country's fiscal situation, announcing strategic measures to strengthen export controls on bulk commodities by having state-owned enterprises centrally manage exports of products such as palm oil and coal. This sparked market concerns about increased state control and declining profitability in key industries.
Analysts believe that Indonesia is approaching the dangerous brink of a crisis similar to 1998. That year, the Asian financial crisis caused the rupiah to plummet, hundreds of companies went bankrupt, and soaring food prices exacerbated the economic ordeal, plunging millions into poverty.
Subsequently, deep-seated corruption and cronyism in Indonesia’s “New Order” government triggered widespread public dissatisfaction, leading to mass protests and riots, and ultimately toppling the authoritarian leader Suharto.
However, Indonesia’s Finance Minister Purbaia dismissed claims that the recent rupiah depreciation could lead to a repeat of the crisis. Responding to the issue last week, he said the current situation is not comparable to that period, emphasizing that Indonesia’s economic fundamentals remain strong.
Nevertheless, public opinion believes that aside from the economy, Indonesia’s political and security situation is also worrying.
One of the key goals of Indonesia’s 1998 reform movement was to restore the military to its defense functions, but since Prabowo took office, the military has increasingly intervened in civilian government roles.
Indonesian defense researcher Araf noted that last year’s controversial amendment to Indonesia’s Armed Forces Law—allowing more active military officers to hold civilian government posts—alongside continued expansion of regional army units, is evidence of “militarism regrouping.”
Constitutional expert Bivitri also said that Indonesia is experiencing a “return to authoritarianism,” pointing to the passage of the above amendment as the best example. “Parliament has become a rubber stamp... Of the eight political parties, seven are aligned with the Prabowo government, and the checks and balances mechanism no longer exists.”
Maria, head of the Indonesian civil rights movement "Thursday Action," expressed similar concerns about the current situation. She said today’s conditions are eerily similar to the “New Order” era, including mounting social pressures and increasingly harsh methods of suppressing dissent. A recent incident where an activist was attacked with acid involved a military personnel among the perpetrators.
She said that all these factors indicate that Indonesia is deviating from the path of democratic reform established after 1998.
He said that the government’s increasing intervention in the economy, rising debt pressure, and weakening market confidence are all factors that could trigger a crisis. If economic conditions deteriorate, class divisions will intensify, and public anger may shift from dissatisfaction with the government to resentment towards business elites and the wealthy class.
"If the fiscal situation worsens further, especially when the country struggles to fund free lunches, fiscal subsidies, and meet debt obligations, the risk of unrest will increase."
On Wednesday (May 20), Indonesian President Prabowo delivered a speech in parliament on the country's fiscal situation, announcing strategic measures to strengthen export controls on bulk commodities by having state-owned enterprises centrally manage exports of products such as palm oil and coal. This sparked market concerns about increased state control and declining profitability in key industries.
Analysts believe that Indonesia is approaching the dangerous brink of a crisis similar to 1998. That year, the Asian financial crisis caused the rupiah to plummet, hundreds of companies went bankrupt, and soaring food prices exacerbated the economic ordeal, plunging millions into poverty.
Subsequently, deep-seated corruption and cronyism in Indonesia’s “New Order” government triggered widespread public dissatisfaction, leading to mass protests and riots, and ultimately toppling the authoritarian leader Suharto.
However, Indonesia’s Finance Minister Purbaia dismissed claims that the recent rupiah depreciation could lead to a repeat of the crisis. Responding to the issue last week, he said the current situation is not comparable to that period, emphasizing that Indonesia’s economic fundamentals remain strong.
Nevertheless, public opinion believes that aside from the economy, Indonesia’s political and security situation is also worrying.
One of the key goals of Indonesia’s 1998 reform movement was to restore the military to its defense functions, but since Prabowo took office, the military has increasingly intervened in civilian government roles.
Indonesian defense researcher Araf noted that last year’s controversial amendment to Indonesia’s Armed Forces Law—allowing more active military officers to hold civilian government posts—alongside continued expansion of regional army units, is evidence of “militarism regrouping.”
Constitutional expert Bivitri also said that Indonesia is experiencing a “return to authoritarianism,” pointing to the passage of the above amendment as the best example. “Parliament has become a rubber stamp... Of the eight political parties, seven are aligned with the Prabowo government, and the checks and balances mechanism no longer exists.”
Maria, head of the Indonesian civil rights movement "Thursday Action," expressed similar concerns about the current situation. She said today’s conditions are eerily similar to the “New Order” era, including mounting social pressures and increasingly harsh methods of suppressing dissent. A recent incident where an activist was attacked with acid involved a military personnel among the perpetrators.
She said that all these factors indicate that Indonesia is deviating from the path of democratic reform established after 1998.