The Storm Is Approaching: Indonesia Must Quickly Build Its Finest Economic Resources and Policies
Prof. Dr. Mohammad Nur Rianto Al Arif, S.E., M.Si.
Professor at UIN Syarif Hidayatullah Jakarta
Secretary General of the Indonesian Lecturers Association (DPP Asosiasi Dosen Indonesia)
Assistant to the Presidential Special Envoy for Food Security
In recent years, the global economy has been engulfed in deep uncertainty. Even as the world has yet to fully recover from the impacts of COVID-19, the Russia–Ukraine war has further destabilized global energy and food supply chains.
Just as inflation began to ease, new conflict in the Middle East once again pushed global oil prices upward. At the same time, escalating geopolitical rivalry between the United States and China has created new layers of unpredictability for global trade and investment.
For countries like Indonesia, which is still highly dependent on commodity exports and imported raw materials, these external shocks risk pulling the domestic economy into a vortex.
Pressures on the Rupiah, volatile food prices, and the threat of slower growth have become real concerns. With each crisis also comes a recurring lesson: Indonesia's resilience is not determined solely by external conditions but by its ability to strengthen its domestic economic foundations.
Economic resilience is not merely the capacity to endure turbulence; it is the ability to adapt, seize opportunities, and emerge stronger. Amid an increasingly unpredictable global landscape, strengthening domestic economic resilience has become a strategic imperative for Indonesia to safeguard sovereignty, stability, and public welfare.
This article provides a reflective overview of how current global economic conditions affect Indonesia, the foundational strengths the country already possesses, and the strategies needed to ensure Indonesia stands firm in the face of global shocks.
Where Is The Problem?
The global economy now operates in an era of interconnected crises that reinforce one another, creating layered unpredictability. Five major global forces have the greatest influence on global and Indonesian economic stability.
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First, geopolitical conflict and global security risks.
The war in Ukraine, violence in Palestine, and rising tensions in the South China Sea continue to disrupt global energy and food supply chains. Prices of oil, gas, and wheat skyrocket, pressuring inflation across many countries. -
Second, the fragmentation of global trade.
A world once characterized by free trade is moving toward a new wave of protectionism. Major economies are prioritizing strategic self-reliance from semiconductors to critical minerals such as nickel and lithium. -
Third, climate change and food insecurity.
El Niño has triggered prolonged drought across parts of Asia and Latin America, disrupting food production. Indonesia is not exempt, facing risks of crop failure and rising rice prices. -
Fourth, China’s economic slowdown.
As Indonesia’s key trading partner, China’s weakening economy directly affects demand for Indonesian exports such as coal, palm oil, and nickel. -
Fifth, uncertainty in global financial markets.
High interest rates in the US continue to push capital outflows from emerging markets, weakening the Rupiah and raising the costs of imports and external debt.
These factors reinforce one another, generating multiple layers of pressure on Indonesia’s domestic economy. Economic resilience, therefore, is not optional—it is a strategic necessity.
How Long Can Indonesia Sustain This?
Indonesia’s economy has demonstrated considerable resilience over time. The 1997–1998 Asian Financial Crisis taught painful lessons about excessive external borrowing and a fragile banking sector.
Yet that crisis also triggered structural reforms that strengthened the financial system, improved governance, and consolidated fiscal foundations. When the 2008 global financial crisis hit, Indonesia was among the few countries that maintained positive growth. Prudent monetary policy, a sound banking system, and strong domestic consumption played crucial roles.
The COVID-19 pandemic was another major test. Indonesia experienced a temporary economic contraction but recovered relatively quickly.
Flexible, expansionary fiscal policy through the National Economic Recovery Program (PEN), support for MSMEs, and the acceleration of vaccination programs formed the backbone of recovery.
These experiences show that repeated crises and sustained reform have built Indonesia's economic resilience.
However, facing a new wave of global challenges requires strengthening existing foundations with a renewed focus on inclusive, productive, and competitive economic transformation.
What makes Indonesia's economy resilient?
1. Stable food and energy security
Food and energy self-sufficiency are the bedrock of economic resilience. The pandemic and global conflicts have exposed the vulnerabilities of countries dependent on imported staples and energy.
Indonesia has implemented strategic measures such as the Food Estate program, expansion of national rice reserves, and energy downstreaming through B35 biodiesel and renewable energy initiatives.
However, major challenges remain: stagnating agricultural productivity, shrinking arable land, and slow farmer regeneration, while energy transition faces financial and technological constraints.
Food and energy security must therefore continue with sustainable agriculture, circular economy principles, resource efficiency, and the empowerment of millennial farmers.
2. Advanced industrial downstreaming and manufacturing self-reliance
Raw-material exports continue to dominate Indonesia's economic structure, leaving the economy vulnerable to global price swings.
Industrial downstreaming, such as in the nickel sector, is critical to boosting domestic value-added, creating jobs, and reducing dependence on imported finished goods.
However, downstreaming must not be confined to a single commodity. Indonesia must expand into agriculture, fisheries, and innovation-driven creative industries.
3. Well-Structured Fiscal and Monetary Policies
Disciplined fiscal and monetary policy remains essential. The government must maintain prudent deficits and debt levels while continuing to support growth.
Bank Indonesia must safeguard rupiah stability and inflation amid external pressures. Strong policy coordination between fiscal and monetary authorities will remain vital, especially in navigating potential capital outflows triggered by global interest rate movements.
4. MSMEs
Economic resilience ultimately rests on society’s capacity to endure. MSMEs, which absorb 97 percent of Indonesia’s workforce, remain the backbone of the national economy.
Many MSMEs suffered during the pandemic, yet digitalization and government support through the People’s Business Credit (KUR) program and online platforms enabled recovery.
Strengthening MSMEs through Islamic finance, greater digital access, and integration into major supply chains will be decisive for long-term resilience.
How to Achieve It in the Future?
To build durable resilience, Indonesia needs a comprehensive strategy that integrates macroeconomic, sectoral, and social approaches. Five major strategies can guide this effort:
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Economic diversification and export-market expansion
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Technological independence and national innovation capacity
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The advancement of Islamic finance and financial inclusion
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Digital transformation and development of a circular economy
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Structural reform and improved governance
Each of these components aims to reduce vulnerability, broaden economic opportunities, and build sustainable competitiveness.
Indonesia needs to increase its exports of manufactured goods and technology, open up new markets in Africa, the Middle East, and Latin America, and strengthen regional partnerships like the RCEP.
National innovation must grow through investment in R&D, vocational education, and collaboration between universities, industry, and government.
Islamic finance, including zakat, productive waqf, and sukuk, can become new pillars of stability and alternative financing.
Digital transformation must extend to rural areas and informal sectors, while circular-economy practices reduce waste and optimize resources.
Finally, structural reform remains essential: transparent governance, regulatory simplification, legal certainty, and empowerment of local governments to optimize regional economic potential.
When Will It Be Realized?
True national resilience begins with strong local economies. We must support villages with agricultural, fisheries, and creative-economy potential by providing them with access to capital, markets, and supply-chain integration.
Programs such as Village-Owned Enterprises (BUMDes), Desa Wisata, and community cooperatives can act as catalysts for local economic independence. Strengthening domestic value chains ensures that value creation remains within the country.
Yet building resilience comes with challenges: structural inequality, limited fiscal capacity, dependence on foreign investment, and the complexities of green transition. However, Indonesia possesses significant advantages: a young workforce, abundant natural resources, a large domestic market, and relative political stability.
Who Is In Charge of This?
The new administration under President Prabowo Subianto and Vice President Gibran Rakabuming Raka has underscored the Indonesia Emas 2045 vision, centered on food security, energy independence, and industrialization.
The agenda aligns with the broader goal of building resilience based on national strengths while remaining open to mutually beneficial global cooperation.
History shows that nations that endure are not necessarily the strongest or wealthiest, but those that adapt the fastest. Since Soekarno's governance, Indonesia has weathered crisis after crisis and each time it has emerged with renewed strength.
This article was originally published in Kompas on Wednesday (29/10/2025)