Indonesia Protests: Understanding the Causes and Consequences

Indonesia protests have resulted in 7 deaths and destruction of government buildings. The protests were sparked by economic and political grievances. The government has deployed the military to quell the unrest. The protests are the largest in Indonesia since the fall of Suharto in 1998.

Indonesia has been gripped by violent antigovernment protests, resulting in seven deaths and significant destruction of government buildings. The unrest, sparked by economic and political grievances, has posed a significant challenge to President Prabowo Subianto's administration. The protests, which began on Monday, August 29, have been the largest in Indonesia since the fall of Suharto in 1998.

The protests were initially sparked by reports that 580 parliamentarians receive a monthly housing allowance of 50 million rupiah ($3,000) in addition to their salaries. This allowance, introduced last year, is almost 10 times the Jakarta minimum wage and about 20 times the monthly minimum wage in poor areas of the country. The protesters' demands include a salary cut for parliamentarians and an increase in the minimum wage to align with inflation rates [1].

The protests escalated after the killing of a motorcycle taxi driver, Affan Kurniawan, who was hit by a police vehicle during a demonstration in the capital, Jakarta. The death of Kurniawan, a 21-year-old food delivery service worker, sparked further violence against security forces and led to widespread destruction of public and private property [1].

In response to the unrest, President Prabowo deployed the military to guard key locations and restore order. He also called for a "thorough and transparent investigation" into Kurniawan's death and ordered the military and police to take stern action against rioters and looters. The protests have been accompanied by a steep selloff in Indonesia's stocks, with the market closing 1.5 percent lower on Friday, August 26, and the rupiah sliding 0.8 percent against the US dollar [1].

The protests have also led to a reevaluation of lawmakers' benefits. Indonesian political parties have agreed to cut lawmakers' benefits, including the size of allowances for members of parliament and a moratorium on overseas work trips, in an attempt to calm the unrest. However, student groups have demanded deeper reforms beyond the cut in perks [2].

The protests have highlighted the economic and political challenges facing Indonesia. The World Bank estimates that Indonesia's economy will grow at an average of 4.8 percent between 2025 and 2027, far below the levels promised by President Prabowo. The protests have also raised concerns about the stability of the Southeast Asian economy and the potential for further unrest [1].

As the protests continue, investors and financial professionals are closely monitoring the situation. The unrest has the potential to impact Indonesia's economic growth and investment climate. The government's response to the protests will be crucial in determining the extent of the impact on the economy and the country's political stability.

References:
[1] https://www.aljazeera.com/news/2025/8/29/why-are-antigovernment-protests-taking-place-in-indonesia
[2] https://www.reuters.com/world/asia-pacific/deadly-indonesia-protests-force-u-turn-lawmakers-perks-2025-08-31/