Indonesia Incorporated: From Fiscal Discipline to Global Supply-Chain Leadership

The Jakarta Composite Index’s climb above 8,000 may appear to be a routine market development, but it reflects something deeper: a resurgence of investor confidence in Indonesia’s economic trajectory. That confidence, however, must now be matched by clear, disciplined, and forward-looking policy.

In his speech on Monday, President Prabowo Subianto highlighted five strategic steps in pursuit of a zero-deficit budget:

1. Better budget management
2. Cutting unnecessary expenditure
3. Eliminating corruption within the tax and customs agencies
4. Formalising illegal economic activities
5. Increasing revenue from non-traditional sources (Danantara)

These are prudent and necessary initiatives. Yet Indonesia today is more than a developing nation managing its balance sheet; it is a recognised global middle power, increasingly accepted as a trusted partner by countries across regions.

Translating Geopolitical Capital into Economic Value

The country’s constructive diplomacy has already resulted in tangible economic partnerships:

• United Arab Emirates: >US$20bn committed through UAE–Indonesia Investment Fund
• Japan: ¥5.3 trillion investment plan over five years
• South Korea: US$10bn downstream/EV supply chain initiatives
• European Union: Strategic partnership talks & GSP+ review

This geopolitical capital must now be translated into market access, investment pipelines, and supply-chain opportunities, not treated as an abstract diplomatic asset.

SMEs as Global Supply-Chain Participants

Equally important is how we position Indonesia’s small and medium enterprises (SMEs). Today, they represent 61% of GDP and provide 97% of employment. But in ASEAN peers such as Thailand and Malaysia, SMEs have already begun to supply components and services directly into the global supply chain.

Indonesia must pursue the same pathway. That requires:

• digitalisation of SME operations
• certification and standards support
• export market facilitation
• integration into regional supply networks (RCEP, IPEF, CPTPP supply chains)

This is not social policy. It is strategic industrial policy.

The Next Phase: Indonesia Incorporated

A coherent national strategy must therefore align three pillars:

• Fiscal Discipline – Restore confidence and optimise state resource allocation
• Geopolitical Leverage – Convert diplomatic capital into economic opportunity
• SME Empowerment – Integrate local firms into global value chains

With these three elements aligned, Indonesia Incorporated is not a concept, it becomes an operational reality.

The question is no longer whether Indonesia can compete in the global arena, it is whether the global arena is ready to compete with Indonesia.