There are many causes for Indonesia’s present fragility. All of them can be summarised in two words: slow growth and weak governance. Officially, Indonesia aims to grow at a rate of 7% each year, and so far, it has not achieved this goal. But the problems go far beyond just a temporary downturn in the economy. The rupiah has depreciated sharply in the last year, and there have been large amounts of capital flight due to uncertainty about the country’s fiscal situation. And to top it all off, anxiety is growing about the role of the military in governing the country.

There are many Indonesians who believe that President Prabowo Subianto is attempting to roll back several democratic reforms that were put in place in the years following the fall of Suharto. In short, the post-Reformasi era is in trouble. And to get back on track, Indonesia will require several things, including credible fiscal management, institutionalised democratic accountability, and capitalistic economic diversification. In short, Indonesia’s fragile present will not be transformed into a resilient and growing future by means of grand populist promises or a return to centralised control. Instead, it will be necessary to recreate the discipline and the trust in several rules that are currently being undermined. In short, all of Indonesia’s problems can be solved by one thing: good governance.

The economic challenges of Indonesia’s current state of fragility are deep-rooted in the vast expansion of spending by the current administration, which runs counter to the structural constraints of Indonesia’s state revenues, the free nutritious meals initiative, and the establishment of a sovereign wealth fund, Danantara. Some of these programs have generated much controversy, for instance, regarding their sustainability and opaque governance. Market anxieties are reflected in the depreciation of the rupiah and high volatility in the outflow of........

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