Ministers removed in Indonesia following deadly unrest

Indonesia's president replaced key economic and security ministers in a Cabinet shakeup Monday after deadly protests over lawmakers' perks and the cost of living erupted across the country.

The Cabinet shake-up followed rising public dissatisfaction with President Prabowo Subianto's administration and parliament's perceived insensitivity over economic hardships.

Five ministers lost their jobs, including Finance Minister Sri Mulyani Indrawati, a technocrat who had served as the executive director of the International Monetary Fund and managing director of the World Bank, and Budi Gunawan, the coordinating minister for politics and security.

Subianto chose economist Purbaya Yudhi Sadewa, chairman of the Deposit Insurance Corporation, to replace Indrawati, one of Indonesia's longest-serving finance ministers.

Violent protests gripped the country, home to more than 280 million people, after reports that all 580 members of the House of Representatives received a monthly housing allowance of 50 million rupiah ($3,075), in addition to their salaries. The allowance introduced last year was nearly 10 times the minimum wage in Jakarta.

The independent National Commission on Human Rights reported 10 people died during the five-day protests and cited an inhumane approach by security forces in handling the demonstrations. Police reported the death toll at seven.

The protests grew more violent following the death of 21-year-old ride-hailing driver Affan Kurniawan. He was reportedly completing a food delivery order when an armored police car sped through a crowd of demonstrators and caused him to fall.

Indrawati also become a target of recent protests over the cost of living and fresh perks for lawmakers. Her house was looted Aug. 31, alongside the homes of a number of lawmakers.

Analysts see the protests as a culmination of public anger over economic problems that the government has not addressed seriously, including widespread layoffs and declining purchasing power.

Calm largely returned after Subianto last week revoked lawmakers' perks and privileges, including the housing allowance, and suspended overseas trips.

Subianto also removed the ministers of cooperatives, the youth and sport and the minister for migrant workers protection.

Stocks in Southeast Asia's largest economy tumbled Monday after Subianto removed Indrawati from his Cabinet, closed down 1.28% at 7,766.85, shedding 100.5 points, while the rupiah slid after the news, with one-month non-deliverable forwards declining 1.1% to 16,583 per dollar, the weakest since May.

Indonesia remains attractive to investment, partly because Indrawati's strong credibility has been recognized both domestically and internationally for successfully maintaining a stable, prudent and sustainable fiscal policy, said Fadhil Hasan, a senior economist at the Institute for Development of Economics and Finance.

However, in recent years, Indrawati had accommodated many presidents' ambitious programs, which increased government debt and diminished the credibility of her own fiscal policy, Hasan added.

He said that Sadewa, Indrawati's successor, was a capable economist but lacks a track record in managing fiscal and state finances. "So, I don't think he's the best choice," he said.

Sadewa, 61, highlighted his own experience at a news conference late Monday, noting he had provided fiscal expertise to the last two administrations. He has held several senior government roles, including deputy for maritime sovereignty coordination at the Coordinating Minister for Maritime Affairs Affairs and Investment.

Responding to the market drop after the Cabinet reshuffle, Sadewa said he is "a market person" who will keep Indonesia fiscally healthy and will talk with Indrawati to provide fiscal advice to the government.

The new minister said his focus is to speed economic growth by mapping out fiscal measures and ensuring that government spending is efficient without overhauling systems.

In his campaign for president, Subianto promised to take economic growth to 8% within five years, while official data showing Indonesia's economy expanded 4.87% in the first quarter of 2025 and 5.12% in the second quarter.

"If I said the economy can grow 8%, I'd be lying. But we are moving in that direction as fast as possible," Sadewa said.