Jokowi's Moment
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SPECIAL REPORT INDONESIA February 27th 2016 Jokowi’s moment 20160227_Indonesia.indd 1 15/02/2016 16:51 SPECIAL REPORT INDONESIA Jokowi’s moment Joko Widodo was elected to shake up Indonesia’s politics and make his country richer. He needs to hurry up, says Jon Fasman CROSSINGTHE QUAYSIDE road in Ambon, the capital ofIndonesia’sre- CONTENTS mote Maluku province, requires care, speed and nerve. The pavement is taken up by a row offood carts, and the road is packed with a motley col- 2 Politics lection of lorries, minivans and cars. Motorbikes flit dangerously among Lone fighter the larger vehicles. The shortest path between two points may be a straight line, but the safest is usually a corkscrew dance of leaps, back- 3 Corruption tracks and tight squeezes. The Setya show On one side of the street lies the Banda Sea, which surrounds the 4 Business and economics scattered Maluku islands. On the other is a row oflow commercial build- Roll out the welcome mat ings, selling the sorts of basic household goods available from any street stall in Indonesia: little packets of coffee, tea, shampoo and Indomie in- 6 Infrastructure stant noodles, SIM cards, cigarettes and fizzy drinks. The 13,466-island problem Butfrom one doorwaywaftsthe incongruousscentofChristmas. In 8 Foreign policy a large concrete-floored warehouse sit waist-high pyramids of cloves, Less talk, more action pallets of nutmeg and sacks filled with spices. Merchants weigh their wares on old-fashioned scales. The only concession to the 21st century is 9 Forests their smartphones. A world on fire ACKNOWLEDGMENTS Four centuries ago these spices were literally worth their weight in 10 Looking ahead gold. Small wonder that the Netherlands, Britain, Spain and Portugal The country of the future The author would like to acknowl- edge the generous help he received spent two centuries battling for control of the spice trade. The Dutch pre- from many people while preparing vailed, and the Dutch East India Company (VOC)—whose territories this report. Apart from those would become first the Dutch East Indies and then modern Indonesia— mentioned in the text, particular prospered mightilythanksto itsmonopolyon the spice trade. Buteventu- thanks go to Charles Ball, Robert VOC Blake, Eka Kurniawan, Peter Ellis, ally the bottom fell out ofthe market as the lost its monopoly. Goenawan Mohamad, Rabin Hattari, As spices became less lucrative, Dutch colonists turned to other A list of sources is at Herlina Hartanto, Lex Hovani, Fauzi commodities. They mined tin and coal, developed oilfields and created Economist.com/specialreports Ichsan, Chris Lang, Jacky Manuputty, massive plantations to grow tobacco, cocoa, coffee, rubber, tea, sugar and Ifa Misbach, Rini Soemarno, Rizal An audio interview with Sukma, Adam Schwarz, Maggie indigo. After gaining independence in 1945, Indonesia retained a com- the author is at Tiojakin, Alissa Wahid and Wellian modity-based economy. Economist.com/audiovideo/ Wiranto. For its entire modern history, money grew on trees, bubbled up 1 specialreports The Economist February 27th 2016 1 SPECIAL REPORT INDONESIA recognised that the era of commodity-dri- ven growth was over. He said he wanted to attract high-value manufacturing and services, and realised that would require massive infrastructure investment and a better business climate. In the World Bank’s Ease of Doing Business index, In- donesia ranks a woeful 109 of189. Jokowi got off to a strong start, trim- ming his country’s wasteful fuel subsidies after just three months in office. Since then, however, the enthusiasm that greet- ed his election has begun to curdle. He has promised far more than he has delivered so far. Not only has growth failed to pick up, it has continued to slow: preliminary figures show that GDP last year increased by just 4.8%, the lowest rate since 2009. For all the talk about infrastructure invest- ment, too few shovels have hit dirt. Con- fused policy guidance and lost fights with his party have made him look weak. His foreign policy initially appeared prickly: he blew up neighbours’ fishing boats and executed foreign drug dealers. Fears of radicalisation and religious intolerance are growing. And after seven years of 2 from beneath the sea and wasdugoutofmines. TodayIndonesia calm, terrorism returned to Jakarta in January: jihadists struck is South-East Asia’s biggest country by both population (255m) the centre of town, killing four civilians. Many wonder whether and size ofthe economy. Itproducesmostofthe world’spalm oil, their pre-election confidence in Jokowi was misplaced. as well as large shares of its rubber, cocoa, coffee, gold and coal. This special report will argue that it was not. But in office Jo- Commodities make up around 60% of the value of its exports. kowi has struggled to find the sense ofpurpose that drove him as When the world was buying, Indonesia prospered: its GDP, both a candidate. His often diffident leadership style has caused need- overall and per person, grew steadily throughout the late 20th less confusion; economic liberalisation has been slow; and he century(exceptduringthe 1997-98 Asian financial crisis) and well has shown less appetite than expected for taking on vested inter- into the 21st, thanks largely to a ravenous China. ests. He promised votershe would change the sytem. The follow- But in recent years, as China’s appetite has waned and the ingarticles will explain what he must do to fulfill that promise. 7 price of commodities plummeted, Indonesia has struggled. Be- tween 2010 and 2014 its overall growth rate fell from 6.2% to 5%. As economic growth slowed, it became clear that the country Politics had persistently failed to invest enough in infrastructure and education. Its political system remained narrow and patronage- ridden. Jakarta, Indonesia’s capital and largest city, boomed and Lone fighter Java grew richer, whereas millions of people in the far-flung east felt they lived, in the words of one Ambonese priest, in “forgot- ten Indonesia”. In 2004, with great fanfare, Susilo Bambang Yud- hoyono became Indonesia’s first directly elected president; in 2014 he practically slunkout ofoffice. His successor, Joko Widodo (known universally as Jokowi), is different from any previous Indonesian president. He does not Jokowi’s independence is a double-edged sword hail from the Jakarta elite and has served neither in the army nor CAMPAIGN POSTERS AND rallies reveal much about in parliament. The eldest son of a poor family from the Javanese what a politician wants voters to thinkofhim. During Indo- city of Solo, he acquired a reputation for pragmatism and—most nesia’s 2014 presidential campaign, two conservative candi- important to his popular appeal—clean governance, first as dates, Prabowo Subianto and Hatta Rajasa, wore buttoned-up mayor ofSolo and then as governor ofJakarta. white shirts and black songkok caps in many of their posters, re- Ordinary Indonesians supported him because he was one calling Sukarno, Indonesia’s strongly nationalist first president, of them and had shown himself willing and able to act on Indo- who always wore a songkok in public. Mr Prabowo also wanted nesia’s endemic corruption. The local business community to project toughness; military themes figured heavily in his slo- cheered his victory because he was also one of them: before en- gansand posters. Asa general in Indonesia’sspecial forcesunder tering politics he had been a furniture exporter, and thus under- Suharto, the first elected president, he was accused of multiple stood whatitwaslike to be mummified byIndonesia’snotorious human-rights violations, including the kidnapping, torture and red tape. Foreign investorswere pleased thathe welcomed them, “disappearance” ofdemocracy activists. and hoped he would make Indonesia less protectionist. By contrast, Jokowi usually appeared at rallies and on post- Jokowi vowed to return Indonesia to 7% growth and prom- ers wearing a checked shirt, the garb of an ordinary Indonesian. ised a cabinet staffed by technocrats rather than party hacks. He His image, his background and, often, his words implicitly reject- 1 2 The Economist February 27th 2016 SPECIAL REPORT INDONESIA 2 ed traditional Indonesian politics. He promised to appoint a fice already hobbled. First, the party he represents, the Indone- technocratic cabinet and oversee a “mental revolution” that sian Democratic Party of Struggle (PDI-P), holds just 105 of 560 would drive corruption from politics. As a first step he would parliamentary seats (see chart, next page), forcing him into an strengthen the KPK, Indonesia’s anti-graft body. One short, sim- awkward coalition with smaller parties, all of which demand ple slogan encapsulated his appeal: jujur, bersih, sederhana (hon- concessions in return. Second, unlike almost every other post- est, clean, humble). Suharto president, he does not head his party. Though he had Some of Jokowi’s supporters are now disappointed. As been widely expected to channel his immense popular support they see it, the candidate who promised to change the system into forminghisown party, he instead accepted the PDI-P’snomi- has—in the words of Marcus Mietzner at Australian National nation less than four months before the election. The party’s University—“entered into arrangements with elite actors that re- boss is Megawati Sukarnoputri, herself a former president and semble those made by his predecessor”. He has cut too many daughter ofSukarno. Both she and his running mate, Jusuf Kalla, compromises and failed to confront Indonesia’s vested interests. are prime examples of the sort of elite Jakarta politicians Jokowi But others insist that the president is simply picking his battles, was widely expected to take on, not accommodate. and large-scale change inevitably takes time. Accordingto MrMietzner, MsMegawati “expected absolute Both claims have some truth to them. Jokowi came into of- reverence” from Jokowi. In her speech at the 2015 party congress 1 The Setya show The roots of corruption go deep and wide FOR SEVERAL WEEKS last December, In- office with a strong anti-corruption record, ing that the stake was not for him but for donesians were glued to their televisions and having earned a reputation for clean go- Jokowi and Mr Kalla, his vice-president.