Indonesian President Prabowo Subianto's recent 'sudden' policy changes have generated widespread confusion among the private sector, according to Arsjad Rasjid, chairman of the Indonesian Business Council, in an interview with Nikkei Asia on June 11 [1]. Rasjid stated that inconsistent and confusing policy decisions are sowing 'dangerous distrust' among business leaders, particularly as Indonesia faces turmoil in its currency and financial markets [1].
The Indonesian rupiah has come under pressure, prompting Bank Indonesia to raise interest rates by 0.25% at an emergency meeting in an effort to defend the currency [1]. Business leaders are calling for clearer direction and a coordinated approach to policy-making to restore market confidence. Rasjid suggested the establishment of a presidential 'breakthrough office' to coordinate and communicate economic decisions, which he believes could help reduce uncertainty and foster a more stable business environment [1].
Rasjid warned that ongoing policy uncertainty, especially regarding key commodities and flagship programs, risks undermining Indonesia's economic fundamentals [1]. He highlighted that the government's failure to provide consistent messaging has contributed to market woes and a sense of stagnation, noting, 'Executives need predictability to plan investments and navigate market challenges. Without it, we see capital flight and increased volatility' [1].
The business council is actively engaging with government officials, urging them to address the root causes of market distrust and ensure that fiscal reforms are well-communicated and transparent. Rasjid concluded that restoring trust will require both immediate action to stabilize the rupiah and longer-term reforms to ensure policy clarity and market stability [1].
CONCLUSION
Indonesian business leaders are expressing serious concerns about policy inconsistency and poor communication, which they believe are fueling market distrust and volatility. Immediate and coordinated government action is seen as essential to stabilize the rupiah and restore investor confidence. Without such measures, risks to Indonesia's economic fundamentals and market stability may persist.