29 September 2025 (closed)
Jakarta Composite Index (8,125.20) +85.16 +1.06%
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Finance Minister Sri Mulyani Indrawati Replaced in Cabinet Reshuffle
Indonesia is facing chaotic times, with a series of large anti-government protests having occurred in late August 2025 (leading to at least 10 deaths and extensive damage to public assets). And more problems may loom after Indonesian President Prabowo Subianto decided to go for a cabinet reshuffle on 8 September 2025.
Prabowo reshuffled five strategic ministries and inaugurated one new ministry -the Ministry of Hajj and Umrah - in the Red and White Cabinet. This reshuffle involved the Coordinating Ministry for Political and Security Affairs, Ministry of Finance, Ministry of Protection of Indonesian Migrant Workers, Ministry of Cooperatives and Small and Medium enterprises, and Ministry of Youth and Sports.
The biggest surprise was the removal of Finance Minister Sri Mulyani Indrawati as Finance Minister. Generally, Sri Mulyani is a highly regarded professional who gave the Red and White Cabinet fiscal credibility.
Sri Mulyani had been Finance Minister from 2005, though she temporarily moved to the United States to serve as a World Bank director between 2010 and 2016. She is regarded as an ally of former President Joko Widodo and that may also have been the reason why she was selected by Prabowo to stay on as Finance Minister (besides bringing fiscal credibility). After Widodo threw his support behind Prabowo's candidacy for the 2024 presidential election in the form of his son Gibran Rakabuming becoming Prabowo's vice-presidential candidate, Prabowo scored an easy victory in the election. That is why it is believed that Widodo still plays a role in the background.
However, in recent months there have been some rumours that Prabowo is gradually moving away from Widodo. In this cabinet reshuffle, Prabowo also dismissed Cooperatives Minister Budi Arie Setiadi, a close ally of Widodo and a leader of his campaign team.
During Widodo's second term (2019-2024) Prabowo (back then Defense Minister) allegedly clashed with Sri Mulyani over money flows for the Defense Ministry. That is why we were surprised that she became his Finance Minister in 2024.
It is certain that the market did not respond well to this cabinet reshuffle. When the news was released, the Jakarta Composite Index suddenly tumbled, closing down 1.28 percent.
Those who want to learn more about the background of this cabinet reshuffle can order the August 2025 report. This report discusses the underlying frustrations that triggered massive demonstrations in August 2025.
The report (an electronic report, PDF, in English) can be ordered by contacting us through email and/or WhatsApp:
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