Prabowo's Return

Indonesia gets a new president, but he is part of an old dynasty

It feels like it has been a bit under the radar, but today the world’s largest Muslim nation, also the planet’s third largest democracy, elected a new president (based on the initial returns, full results will take a few weeks).

I have fond memories of Indonesia, spending a significant amount of time there during the nineties as a banker doing large infrastructure deals. One of them was the US$2.6 billion Paiton Power project located close to Surabaya on Indonesia’s main island, Java. This was a privately funded project and international banks underwrote the financing which was not a trivial thing to do. It took many years to complete and I spent around a year of my life working on it pretty much full-time. The shareholders of this project initially were large US and Japanese firms and one local partner. The local investor was a small firm that represented the interests of the country’s first family, in those days the Suhartos. Small though that company was, the ownership represented a fortune. The man looking after the first family’s interests here was Hashim Djojohadikusumo, son of a former minister of finance. I got to meet him a few times in person and all the bankers and lawyers working on the deal looked up to a man who was both unusually wealthy and extremely well connected. The connection to the first family was Hashim’s older brother who at the time was married to one of Suharto’s daughters. His name: Prabowo Subianto and today he got elected to become Indonesia’s 7th president.

Prabowo’s past career is an interesting one. In the days that we were financing his father-in-law’s deal he ran a number of special forces units in the Indonesian army that were involved in the brutal repression in the island nation’s far flung regions such as Eastern Timor and Papua New Guinea. He was both feared and ambitious and his presence on the scene may at times have not helped the financing of the power station. Many, but not all, international investors were quite wary of his role in human rights abuses and at one point he was even barred from entering the United States because of this. When in 1998 Suharto was ousted from power, Prabowo actually maneuvered certain army units in the capital Jakarta sensing the sudden power vacuum might be the opportunity for him to become number one. In the resulting chaos many protesting students were arrested and a number of them never returned, disappearances in which the ruthless Prabowo was directly implicated.

After he left the military he joined his brother Hashim in his business ventures, but stayed politically active. In fact he was very active in a landscape that was shifting all the time as Indonesia tried to find a more democratic footing after the Suharto years. He attempted a run for the presidency in 2009, but only in 2014 and 2019 did he become a leading contender. Outgoing president Joko Widodo won both of these elections and has now fulfilled the maximum two terms a president can serve. Widodo is credited for turning Indonesia into a more democratic and economically thriving nation whereas Prabowo is seen as a far more authoritarian leader. Yet, Widodo has been instrumental in the process of the rebranding of a kinder and gentler Prabowo, even making him part of his cabinet as Minister of Defence and his son, Gibran Rakabuming Raka now on the slate as Prabowo’s running mate. It is a weird turn of events, but it fits a pattern we are seeing in other countries: a wealthy older guy (he’s seventy-two) with authoritarian streaks winning over his people.

The expectation is that Prabowo will continue most of Widodo’s policies which also includes a relatively warm relationship with the United States. Indonesia’s natural resources and strategic location continue to be a key asset in the power balance in Asia, acting as a counterweight to China. The fear however is that Prabowo’s instincts will remain that of the military man he once was and who will use any means at his disposal to quell dissent. Indonesia is a very diverse island empire with strong regional differences, and fundamentalist interpretations of Islam also contribute to an always dynamic set of domestic relations. It does require a strong hand to keep things aligned and unified.

It is not unreasonable to assume that the personal wealth generation machine that powered Suharto ‘s rule will make a strong comeback under Prabowo in which case the past twenty-five years can be seen as an interregnum. The old guard will retake the reigns as a dynasty that was out for a bit, but is now solidly back in. It will be great for a new crop of investors and bankers as the country moves forward under a man that can provide the sort of opportunities and stability that the international business community craves. With his newfound power Prabowo can basically do whatever he wants.