Indonesia's struggle to balance fragile budget condition with funding ambitious projects left ESG on the sideline.Amidst extreme pressure to balance spending between his ambitious and populist programs with the country’s fragile budget conditions, Indonesian President, Prabowo Subianto, leaves one thing on the sideline: ESG. Across several strategic industries, the narratives and attention surrounding this matter has been absent—if not downright abandoned.In the palm oil sector, Prabowo remarked that palm oil plantations should be expanded and that the plantation would not cause deforestation, equating palm tree plantations to forests. In the energy sector, Indonesian government invites  businesses to invest in the country’s coal industry rather than focusing on developing domestic renewable energy. Furthermore, Prabowo’s younger brother and Special Envoy for Climate and Energy, Hashim Djojohadikusumo, also stated that Indonesia may follow Donald Trump’s footsteps to withdraw from the Paris Agreement. In the mining sector, the newly revised Law on Mineral and Coal enables religious organizations, SMEs, and cooperatives to obtain mining concessions through “priority channels”, i.e., without having to undergo the auction system, possibly worsening the sector’s decades-long governance problem. MIXED SIGNALS REDUCE INDONESIA’S ACCESS TO ALTERNATIVE FINANCINGIndonesia’s economy relies on domestic consumption as its key drivers. However, for the most part of 2024, the nation’s purchasing power—especially among the aspiring middle class—have been in weaker state that can continue throughout 2025. The country also cannot rely much on increasing government expenditure since the state’s budget is under pressure from debt payment and budget savings reallocation for free meal program and financing the country’s sovereign wealth. Meanwhile, although trade balance remains positive in early 2025, Indonesia’s reliance on natural resource commodities put them at the mercy of global market prices.This leaves increasing foreign direct investment (FDI) to be one of the most feasible—and pressing—alternatives to reinvigorate the economy. Prabowo is well aware of this situation. Hence, he spent much of his early months in office travelling abroad, trying to entice global businesses and foreign governments to do business with Indonesia. But the government’s remarks and policy actions send a mixed signal to potential partners and investors. The lack of meaningful reforms to improve governance and turning a blind eye on environmental impacts from carbon intensive sectors can put Indonesia at risks of losing opportunities to tap into high added-value investments, one of which is in the renewable energy sectors.Indonesia has 443GW of potential renewable energy. It sets out ambitious target of achieving 35% renewable energy mix in 2034, focusing on solar, hydropower, and geothermal, according to the State Electricity Company’s Updated National Power Supply Plan (RUPTL). Prabowo—and Hashim—have also repeatedly asserted Indonesia’s commitment to develop domestic renewable energy industries in various forums, even the willingness to cut geothermal development permit process down from 18 months to five days.Yet, developing this sector demands a mix of rigorous feasibility study, technical expertise, financial and human capital investments, and accountable project management to name a few—all of which requires strong governance performance and high degree of business certainty.At the same time, the government chooses to prioritise energy security over decarbonisation, postponing its renewable energy mix target, signalling that a rapid adoption of renewables seem to be less likely under Prabowo’s first term while also creating a confusion among investors and stakeholders over the country’s commitment for decarbonisation.When FDIs seem unobtainable, climate funding is one way where Indonesia can continue to fuel its decarbonisation projects without adding more strain on the state’s coffers. But, eroding trusts toward developed countries’ commitment to deliver their part of the bargain and the US withdrawal from the Paris Agreement may diminish Indonesian government’s willingness to take a more proactive role in decarbonising their economy—even if it means reduced access to climate funds.POLITICS IS THE KEYIf there is one thing that businesses can learn from how the current administration runs the country in their first 100 days, is that politics is still—and most likely will remain—the important unit of analysis to understand the government’s approach to policies, including ESG implementation.Prabowo and his party, Gerindra, won the 2024 Presidential Election after repeated attempts since 2009. This creates a situation in which he and his party not only need to prove that they are capable to run the country, but also to consolidate power immediately to secure possible re-election in 2029 and dominating the Parliament (Gerindra currently sits as the third largest party by seat in the National Parliament). Concurrently, Indonesia’s budget situation leaves little room for incentivising nascent, promising industries. Prabowo—who was the Commander of Army Strategic Reserves Command during Indonesia’s financial crisis in 1998—knows too well that declining economic condition can leads to instability and widespread crisis or even topple the ruling regime. Economic-turns-political crisis is then the last thing that Prabowo would want if he wants to secure his second term in the next election. These conditions translate into the necessity to come up with quick-win programs that can secure public’s support and political stability.Therefore, forgoing long-term, high value-added industry development grounded in ESG considerations to prioritise short-term strategy that depend on usual tactics and commodities can be understood within this political framework. Furthermore, this policy approach may be extended beyond ‘state of survival’ in 2025 and present throughout Prabowo’s first term if it seen as still bringing in the intended outcomes. But two questions will remain from this policy approach: What is the cost of abandoning ESG commitment? And who will bear the cost?