Hopes were high when the former businessman turned politician Joko “Jokowi” Widodo was sworn in as Indonesian president in October 2014. Over a year later though, his report card is mixed, with economic growth slowing, inflation and unemployment rising and Jokowi’s popularity waning, amid a battle to purge corruption and reform Southeast Asia’s largest economy.
The Diplomat spoke to Indonesian journalist Harry Bhaskara, former managing editor of the Jakarta Post, for his views on Jokowi’s prospects, his foreign policy and the outlook for the world’s fourth-most populous nation.
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I think that is the case, as shown by his wave of economic reform packages, including the sixth which just came out after the recent Cabinet reshuffle. I think it shows that he has trust in an investor-friendly, pro-market system.
What reforms have been the most significant?
For the people, the villagers’ fund and spending on education and schools and so forth. But for investors, the most interesting one would be the latest one, the sixth package which came out in November, which creates eight special economic zones around the country, including in Sulawesi, Kalimantan, East Nusa Tenggara and Maluku. It gives tax holidays and other incentives to investors, including lower costs for importing raw materials, especially the food and drug industries.
The latest GDP data from Indonesia showed a 4.7 percent annualized expansion in the third quarter, below expectations for 4.8 percent growth amid weak commodity prices. How are you seeing the economy?
The rupiah has strengthened recently, and while GDP should be boosted by the economic reforms, Indonesia’s economic institutions are not as strong as they should be. The commodity slump, including coal, has caused rising unemployment. State revenue has also gone down. [However] the cut in fuel subsidies in the early part of the Jokowi administration was a boon, as it has given the government some spare money for the implementation of its programs and for emergency purposes.
You have suggested that Jokowi is not guaranteed to survive his five-year term – what are the risks of him being removed from office?
I think an impeachment is the worst-case scenario – it’s quite remote at the moment. To be impeached, Jokowi would have to make a gross mistake, such as being involved in evident corruption. It’s not easy to impeach a president, but I mentioned that possibility because Indonesian politics is very unpredictable.
There are concerns that someone like his former presidential rival, Prabowo Subianto, who is an old politics icon who is strong financially and with strong connections in the military, would move to block Jokowi’s reform programs. But the latest survey showed most people would like him to stay, despite the weaknesses shown over the past year.
Jokowi surprised Japan earlier this year by apparently reneging on a high-speed rail deal in favor of a Chinese bid, while there have also been tensions over incursions by Chinese fishing vessels into Indonesian waters. How are you seeing his handling of relations with Asia’s two main powers?
I don’t think it’s a good indication [re the railway deal] and I hope Jokowi makes less of those kinds of decisions, as it sends a very bad signal to countries like Japan, which has been one of the top investors in Indonesia for many decades. But I think Jokowi is learning the ropes on the economy, particularly with the big players. I do not know the detail why he back-flipped regarding Japan, but it’s not a good thing to do again in the future.
About fishing, the number one problem is that China has been fishing in Indonesian waters for centuries. After Indonesian independence, there have been laws and regulations but it is quite risky as Jokowi has a strong policy on illegal fishing. This, however, will take time as Indonesia lacks the naval forces. I hope China will also learn to respect Indonesian maritime law, not to fish in Indonesian waters.
Concerning ties with Australia, there were rows with former Australian Prime Minister Tony Abbott over the Bali drug trafficker executions and spying. Have ties improved under Australia’s new leader, Malcolm Turnbull, who recently visited Indonesia?
Since Turnbull became [Australian] prime minister the reaction has been very good in Indonesia, coming from scholars, government leaders, who seem to warm more to Turnbull than Abbott. But it’s too early to say whether the relationship will be better under Turnbull.
Yet optimism is there, particularly when you saw Turnbull visiting a street market with Jokowi. Jokowi is well known for his incognito visits, going down to see the people in the market and so forth, and I’m surprised Turnbull joined that. It was very hot, he was obviously perspiring, but the two leaders seemed to have chemistry.
Australia and Indonesia will restart trade talks next year, with Australia’s Trade Minister Andrew Robb targeting a deal within a year. Is this timetable realistic?
The one-year deadline is realistic. Even though Jokowi has his recent economic package, whether it translates into action as good as the plan, I have my worries. The economic institutions in Indonesia are not very strong, but one year is quite realistic under Robb. Jokowi is working to shorten licensing waiting times and to set up one-door stop centers for investors.
Recent world summits have been dominated by the issue of terrorism. How has Jokowi handled this, given the threat from domestic extremists?
He’s definitely against terrorism and very pluralist in his outlook. But my worry is that Indonesia is one of the biggest countries in the world sending fighters to Syria, about 500, and many of them have come home. Indonesia is quite lax regarding security compared to countries like Australia, and even though the government has banned [Islamic State] followers they still exist and are still active, so terrorist attacks are always a possibility in Indonesia.
Jokowi has strengthened his grip on power by choosing an armed forces chief from the army instead of the air force as scheduled. Will his improved ties with the army be a barrier to reform?
That’s a good question – at the moment it’s fifty/fifty as some elements in the military have very strong resistance to reform. Jokowi cannot go ahead 100 percent with his reform programs because of the resistance, but he needs military backing for his own survival.
Using a metaphor, it’s like a soccer match with Jokowi’s team against Real Madrid – Real Madrid is very strong, a world caliber squad and they have trained for decades. For Jokowi’s team, Jokowi was originally one of the spectators and he was picked by half of them to lead the team, but nearly two-thirds of the team members do not like his captaincy and would like to sabotage him. And the referee is not impartial either, so it’s a very difficult situation for him in regards to reform.
Has he managed to distance himself from party leader Megawati?
She is still an influence, but there are indications that Jokowi has been trying to fight back and make his relations with Megawati productive, but do things his own way.
Overall, how are you seeing the outlook for Jokowi and Indonesia over the next few years – will Indonesia achieve its apparent destiny as a regional power?
Over the next few years, we will have a better picture of whether Indonesia can achieve its destiny of becoming a regional power, but not now, and in the near future, it’s still very difficult. After the recent economic package, next year will still be difficult. It’s Indonesian people’s hope that the package will perform as planned, but I have my doubts. Muddling through next year and maybe after the third year we’ll have a better picture to see if Indonesia can really become a regional power.