Context: Recently, Indonesia witnessed violent protests against a range of cost-of-living issues. The protests have generally been seen as an incitement of anger against the elites by the middle class.
Relevance of the Topic : Prelims: India and its neighbourhood: Indonesia
Indonesia, Southeast Asia’s largest democracy and economy, was rocked by one of its most intense waves of protests in recent years. Protestors attacked public buildings, burned down and looted houses of public officials.
Causes of the Protests in Indonesia
- Public resentment against elite privileges: Members of Parliament in Indonesia receive a monthly housing allowance of 50 million rupiah (about $3000) which is almost ten times the national minimum wage.
- Austerity measures introduced by the government: President Prabowo’s government announced budget cuts worth 306 trillion rupiah (approximately $18.8 billion) to fund the flagship school meals programme. This led to steep budgetary reductions in vital sectors such as public works, economic affairs, investment, and higher education.
- Tax hikes by regional governments: To offset the impact of reduced central funding, regional authorities imposed heavy tax increases. E.g., 250% hike in property tax in Pati, Central Java.
- Income inequality: While the Gini coefficient of Indonesia has been declining, the country still registers one of the highest levels of inequality in the Southeast Asian region. As per an Oxfam report, Indonesia ranks sixth among countries with the greatest wealth inequality.
- Additional issues include low wages and job insecurity. Education also remains underfunded, with various barriers restricting higher education.
Also Read: India-Indonesia Bilateral Relations
At the regional and global level, Indonesia’s political stability is crucial for ASEAN and for global supply chains that depend on Southeast Asia’s largest economy. Continued unrest could therefore affect not just Indonesia but the wider region.