Post by : Meena Ariff

President Prabowo Subianto, in his first major State of the Nation speech, promised a tough crackdown on illegal mining and oil palm plantations, while highlighting social programmes and economic goals for Indonesia’s future.

He also unveiled the government’s 2026 budget plan, worth 3,786.5 trillion rupiah (about S$300 billion), an increase of 7.3% compared to the estimated spending for 2025. The budget proposal sets a deficit target of 2.48% of GDP, with assumptions of 5.4% economic growth, 2.5% inflation, and an exchange rate of 16,500 rupiah per US dollar.

This marks the first budget proposal prepared by Mr Prabowo’s administration since he officially took office in October 2024.

War on Illegal Mines and Palm Plantations

The President vowed to tackle 1,063 illegal mines across the country, many of which are reportedly run by influential figures, including current and retired military and police generals.

“There is no reason for the government not to act when it is for the people,” Mr Prabowo declared, earning a standing ovation from lawmakers.

He also revealed alarming figures about the palm oil industry. Around 3.7 million hectares of oil palm plantations are operating illegally—equivalent to nearly twice the size of Johor state in Malaysia.

In addition, five million hectares of plantations are under investigation for operating in protected forests, underreporting their size, or ignoring government summons.

Already, the government, with help from the military, has seized 3.1 million hectares of illegal plantations. Mr Prabowo admitted that strong resistance was met during these operations, which is why military support was necessary.

“We will ensure the Indonesian people are not victims of greedy economics,” he stressed.

Fight Against Corruption and Wasteful Spending

Mr Prabowo tied the crackdown on illegal activities to his government’s anti-corruption drive. He announced savings of about 300 trillion rupiah by cutting unnecessary and wasteful expenses such as overseas junkets, excessive meetings, and other non-essential spending.

He warned that the government “will not hesitate to unravel major corruption cases” if needed.

Free-Meal Programme Expansion

Responding to critics of his flagship free-meal programme, the President said it was not only affordable but necessary to fight hunger and poverty.

“Our goal is to free the nation from poverty, hunger, and suffering,” he explained.

Currently, about 20 million people, including students and pregnant mothers, are receiving free meals. The target is to reach 82.9 million people under the programme.

This ambitious scheme was launched in January 2025 to combat malnutrition and stunted growth, a major election promise made by Mr Prabowo. Critics, however, question whether such a large programme can be sustained in the long run.

Support for Farmers, Fishermen, and Villages

The President laid out plans to strengthen the economy at the grassroots level. He announced the creation of 80,000 cooperatives nationwide to help farmers, fishermen, and villagers get fair prices for their products.

He also promised support for food security by expanding edible crop farming and improving Indonesia’s self-sufficiency in food production.

Investments in Education and Sovereign Wealth Fund

Mr Prabowo said that Indonesia will establish 20 special schools for the top 1% of talented students in the country. These “gifted schools” aim to prepare future leaders and innovators.

He also highlighted the importance of building up Indonesia’s sovereign wealth fund, Danone, to strengthen long-term investment strategies.

Focus on Critical Minerals, But Caution from Economists

A big part of Mr Prabowo’s economic plan involves boosting downstream industries for minerals like nickel and copper, which are vital for renewable energy projects.

By processing these minerals locally, Indonesia can earn more from exports instead of just selling raw materials.

However, some economists warn that nickel processing may not generate enough jobs since it relies on fewer workers. They argue that sectors like agriculture, which employ millions, should not be neglected.

Silence on New Capital Nusantara

Interestingly, Mr Prabowo did not mention the construction of the new Indonesian capital, Nusantara, a project championed by his predecessor, Joko Widodo.

While he had earlier promised to continue the project, his omission in this speech has raised questions about whether the ambitious move to East Kalimantan remains a priority.

Adding to the uncertainty, Mr Prabowo will host the upcoming 80th Independence Day celebrations in Jakarta, instead of Nusantara, which further hints at shifting priorities.

Global Challenges: US Tariffs on Indonesia

Indonesia also faces external challenges. Recently, the United States imposed a 19% tariff on Indonesian goods. Some commodities like processed nickel may face lower tariffs, but the move could still hurt exports.

Economists say Indonesia needs to carefully plan its budget and make sure spending is productive and well-managed to overcome such challenges.

A Vision for 2029

In his speech, President Prabowo outlined his vision for the remainder of his five-year term until 2029. He emphasized:

• A clean government that fights corruption

• Stronger support for farmers, fishermen, and villagers

• Expansion of education opportunities for the brightest students

• A continued push for food security and self-sufficiency

• A massive social safety net through the free-meal programme