Is Strategic Pragmatism the Key to Indonesia’s Economic Security?

Indonesian President Prabowo Subianto in his keynote speech at the World Economic Forum (WEF) Annual Meeting 2026. (Photo: Press, Media, and Information Bureau of the Presidential Secretariat)

One of the most significant trends shaping international affairs today is the rise of economic security as a central pillar of foreign policy. Increasingly, countries no longer view trade, investment, energy, technology, and supply chains solely through an economic lens. These issues are now inseparable from national resilience, strategic competitiveness, and security.

The return of President Donald Trump has further accelerated this trend. Higher tariffs, trade restrictions, industrial policy interventions, and a more transactional approach to international economic relations have prompted many countries to reassess their dependencies on single markets and pursue greater diversification of trade and investment partnerships.

At the same time, geopolitical tensions are exposing vulnerabilities across critical sectors. When disruptions threaten the Strait of Hormuz, countries immediately reassess their energy security and dependence on imported oil. When conflicts emerge in major agricultural regions, governments begin calculating their exposure to food and fertilizer shortages.

When major powers impose export controls on critical technologies or strategic minerals, countries scramble to secure alternative supply chains and reduce dependence on external actors.

In short, governments and businesses around the world are conducting comprehensive reviews of their economic vulnerabilities. The objective is no longer merely efficiency; it is resilience.

This raises an important question for Indonesia: What should Indonesia’s strategy be in an era increasingly defined by economic security?

Indonesia cannot afford to remain a passive observer of these developments. The country requires a comprehensive approach that strengthens energy security, food security, critical mineral security, digital resilience, and supply chain diversification.

Equally important, Indonesia must identify which strategic sectors will determine its long-term competitiveness and ensure that its foreign policy, trade policy, industrial policy, and investment strategy are aligned in supporting them.

At the same time, Indonesia should position itself as a trusted, stable, and attractive partner for international investment. In an increasingly fragmented world economy, countries that can provide predictability, stability, and strategic value will be best positioned to attract capital, technology, and long-term partnerships.

This broader transformation also invites a fundamental reassessment of Indonesia’s foreign policy framework. Is strategic autonomy still the most appropriate guiding principle for Indonesia in today's geopolitical environment?

Traditionally, strategic autonomy refers to a country's ability to make independent foreign policy, security, and economic decisions without excessive dependence on, or control by, major powers or alliances. The principle has long shaped Indonesia’s diplomatic posture and remains an important foundation of its foreign policy identity.

However, in an increasingly competitive and interest-driven international system, strategic autonomy alone may no longer be sufficient.

Rather than focusing exclusively on maintaining distance from major powers, Indonesia should adopt a more pragmatic approach that actively leverages great-power competition to advance national interests.

The objective should not simply be to avoid dependence, but to generate economic, political, and security benefits from engagement with multiple partners.

Several concepts capture this approach. One is “Pragmatic Hedging”, which emphasizes maintaining flexibility while extracting benefits from competing partners. Another one is “Strategic Pragmatism”, a foreign policy approach in which Indonesia actively leverages competition among major powers to maximize national gains while avoiding exclusive alignment with any single actor.

In a world increasingly shaped by strategic competition, Indonesia needs a foreign policy framework that enables it to engage all major powers, capitalize on emerging opportunities, and minimize risks without sacrificing its independence.

In my opinion, for strategic pragmatism to be effective, four key conditions must be met.

First, preserve strategic flexibility. Indonesia should continue to avoid formal alliances that could constrain its policy flexibility and limit its room for maneuver. While deeper cooperation with individual countries, regional groupings, and mini-lateral arrangements is both acceptable and often beneficial, formal alliance commitments should be approached with caution.

Maintaining flexibility allows Indonesia to engage different partners based on national interests rather than bloc politics.

Second, conduct a comprehensive assessment of national strengths and vulnerabilities. Indonesia must develop a more sophisticated understanding of both its strategic assets and its vulnerabilities. This assessment should go beyond traditional measures of economic potential and include critical dependencies related to energy, food, technology, critical minerals, logistics, and digital infrastructure.

Since economic security is increasingly driven by vulnerability management, understanding where Indonesia is exposed is essential for developing effective partnerships and national strategies. A country that understands its vulnerabilities is better positioned to transform them into strategic opportunities.

Third, operationalize Indonesia Incorporated. President Prabowo has repeatedly emphasized the importance of “Indonesia Incorporated” and the need for Indonesia to project itself internationally as a unified national team. Conceptually, this is precisely the right direction.

Indonesia Incorporated should mean presenting Indonesia as a complete ecosystem: government institutions, state-owned enterprises, private businesses, financial institutions, academia, and civil society organizations working together toward common national objectives.

Yet, the concept must move beyond rhetoric and become an operational framework. Successful economic diplomacy requires coordinated action. Foreign partners should encounter a coherent Indonesian strategy rather than fragmented institutions pursuing separate agendas.

Fourth, prioritize strategic opportunities. Indonesia's ambitions must be matched by realistic assessments of available resources. Diplomatic capital, institutional capacity, financial resources, and political attention are all finite. Like any successful organization, Indonesia cannot pursue every opportunity simultaneously. It must identify where its comparative advantages lie and where engagement can generate the greatest economic and strategic returns.

This consideration is particularly relevant when evaluating the growing number of trade agreements and economic partnerships Indonesia has concluded, including various Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs).

The challenge today is no longer signing agreements; it is implementing them. A trade agreement, regardless of how ambitious it may be, remains merely a document unless businesses understand it, utilize it, and receive the necessary support to capture the opportunities it creates.

The success of economic diplomacy should therefore be measured not by the number of agreements signed, but by the economic value they generate. Ultimately, diplomacy is not only about opening doors. It is also about deciding which doors matter most.

Strategic autonomy remains an important principle for Indonesia. However, if interpreted too rigidly, it risks evolving into strategic passivity. A foreign policy that focuses primarily on avoiding alignment may inadvertently discourage Indonesia from taking full advantage of geopolitical competition and emerging economic opportunities.

Strategic Pragmatism offers a more proactive alternative. Rather than viewing great-power rivalry as a challenge to be avoided, it treats competition among major powers as an asset that can be leveraged to advance Indonesia’s national interests.

The question facing Indonesia today is no longer whether it can remain non-aligned. The question is whether it can transform its strategic autonomy into strategic advantage.

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This article written by Noto Suoneto, VP for International Affairs and Operations at Indonesian Business Council (IBC) and Founder of Foreign Policy Talks.