Economic inequality behind unrest in Indonesia
The protests in Indonesia have been fueled by economic hardship, corruption, and a growing distrust of the government and military
JAKARTA, Indonesia (MNTV) – The protests in Indonesia have been fueled by economic hardship, corruption, and a growing distrust of the government and military, says an analysis reported by the Asia Times.
Social media is awash with carefully curated imagery and narratives that reframe issues, individuals and institutions in a mashup of divergent interests and virtue signaling.
Powerful Indonesian influencers, very often with little or no background in politics, are using the events and twisting narratives to attract traffic and accumulate more followers.
Rising anger amid economic hardship
The protestors are predominantly young working-class men, including motorcycle taxi drivers, laborers and university students. Indonesia’s police have a documented history of using excessive force, prompting Amnesty International to condemn the authorization of “shoot on sight” orders with rubber bullets for crowd control as both “misguided” and “inhumane.”
Direct political action and public dissent has been brewing all year, largely centered on demands for economic justice, civilian supremacy over the National Armed Forces (TNI), police reform, fair wages and a robust anti-corruption agenda.
Crucially, the protests come at a time when the country’s balance sheet is under severe strain, with certain indications the nation is nearing a fiscal breaking point, while lower-income households face an intensifying cost-of-living crisis.
Recent steep cuts in central government transfers to regional authorities triggered massive local tax hikes—ranging from 250% to 1,000% in some areas—which in turn sparked violent protests. The largest so far took place in Pati, Central Java on August 13, which saw 100,000 people take to the streets.
Mounting debt and fiscal mismanagement
Instead of belt-tightening, President Prabowo’s administration is defiantly pushing ahead with big-ticket spending promises, such as the free school meals program, which could cost up to $30 billion annually at full scale, and a pledge to pump vast sums into the country’s boondoggled savings and loans cooperatives.
Meanwhile, spending on infrastructure, health, defense, education and Indonesia’s bloated bureaucracy is further stressing a balance sheet burdened by a lack of prioritization, heavy debt and widespread, rampant corruption.
To make matters worse, Sri Mulyani Indrawati, the country’s longest-serving finance minister, has presided over a fiscal spending program increasingly reliant on debt financing.
In 2025 alone, Indonesia’s total debt servicing – including both interest and principal – is estimated to have reached approximately 1.35 quadrillion rupiah ($83 billion). This figure is nearly half of Indonesia’s central government expenditures and is unsustainable by any credible accounting.
High food prices, punishing electricity bills and a cost-of-living crisis in urban centers have eroded the purchasing power of Indonesia’s working class and weakened household consumption. Depleted savings amongst low-income households and small businesses further underscore the economy’s fragility.
The public’s explosive reaction to Sri Mulyani’s economic management unfolded over the past week, culminating in the raiding and looting of her home over the weekend.
Subsistence agriculture remains the fallback for those lucky enough to have access to farmland.
But even in the villages, the working class faces other forms of exploitation. Illegal online gambling in Indonesia is hollowing out low-income families through frequent small-sum bets and the illusory promise of impossibly large payouts.
According to the national Financial Transaction Reports and Analysis Center (PPATK), raiding and looting online gambling turnover in Indonesia could exceed 1.2 quadrillion rupiah ($74 billion) in 2025, equivalent to 10 times the national budget for the country’s 435,000-strong police force. Indonesia’s poor are being taxed, both legally and illegally, to the breaking point.
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