This year marks 20 years since the downfall of Suharto. It was in 1998, after the Asian financial crisis and a widespread student-led uprising, that Suharto was forced to step down. Suharto was one of the most corrupt leaders in history, siphoning off billions of dollars during his 32-year New Order rule. Indonesia, however, has gone through a transformation since 1998 and is now one of the world’s most vibrant young democracies and the largest Muslim majority democracy on earth.
Indonesians will go to the polls in 2019, so political parties and ambitious politicians are already maneuvering for position. Jakarta’s election for governor was driven by race and religion; identity politics played a big role in the outcome. It remains to be seen if identity politics will play as big a role in the presidential election – as it is almost certain that all the main candidates will be Muslim and Javanese, race and religion may not be as critical a factor. However, political Islam and various hardline conservative Islamic groups were mobilized with great effect during the Jakarta election, so candidates that play the religion card may do well. This bodes badly for president Joko “Jokowi” Widodo, who has remained a secular moderate president during his first term in office.
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Decentralization is the key word when it comes to Indonesia today and Indonesian politics. State functions (such as health and education) are now carried out at the national and local levels. So is politics. Indonesia will have provincial elections in June, ahead of next April’s presidential vote. This will be the stage when the extent of religion in politics will be measured and those who seek power at the center come to power at the local level – a prelude to the national presidential race. Jokowi would never have been able to win the presidency had it not been for decentralization – a former furniture salesman from Solo rose up the provincial ranks from being elected mayor of Solo to being elected governor of Jakarta and then president. Under Suharto, everything was run from the center. Decentralization and democracy in Indonesia have gone hand-in-hand.
The dark side of decentralization is that corruption has also been decentralized – from the central level only to local levels of government. Politicians steal to fund election campaigns whereas before the money flowed up from the regions to Suharto and the center directly. Indonesia today, therefore, is a corrupt democracy – hundreds, if not thousands of politicians, end up in jail each year for taking bribes and stealing from state budgets. Indonesia ranks 96th out of 180 countries on Transparency International’s Corruption Perceptions Index.
The Role of the Economy
Indonesia’s economic growth is stagnant and will likely remain so. Despite rosy reports that predict the country to be the seventh biggest economy in the world by 2030, Indonesia is not growing fast enough to get there and has not changed the one thing that holds it back: its institutions. The World Bank currently predicts relatively flat growth for Indonesia of around 5 percent annual GDP, so Indonesia’s economy is by no means booming,; however, compared to its peers – see Brazil – with declining growth rates, Indonesia’s economy still performs well.
Indonesia saw a democratic transition, but it never saw a truly legal transition after Suharto. Legal institutions remain the weakest in society and in today’s Indonesia legal contracts and the sanctity of these contracts always remains questionable. From forestry to banking, squabbles over legal ownership and responsibility remain. Indonesia has also never subjected itself to international arbitration, so companies that make contracts with the government – be that at a local or national level – are never truly certain their investments will be guaranteed. Decentralization has muddled the legal process where permits may be given by one but not another government body. Jokowi, to his credit, has unveiled several economic packages designed to roll back regulation and red tape and encourage much needed foreign investment, but they are not sufficient to boost Indonesia’s economy under its current fiscal constraints.
Many young Indonesians are out of work and want change – they lack the skills to compete in a globalized economy. This could bode badly for Jokowi as elections come to pass. Some will be looking for populist measures to boost growth. Indonesia’s lower middle class is being increasingly squeezed by a lack of real term wage growth and backtracking on fuel subsidy reform is tempting, as is putting further restrictions on foreign workers. Both are populist, but unwise policies.
2019 and Beyond
Jokowi vs. Prabowo — this will be the likely pair that face off in April. Prabowo is a former military leader and the son-in-law of Suharto. Prabowo has a nationwide political party and plays up his muscular strongman image in public. This appeals to some audiences who see a need for strong leadership. He is also likely to mobilize hardline religious groups against Jokowi come election day – Prabowo supported Anies Baswedan’s race and religion driven campaign for Jakarta governor. Indonesia could see a populist-identity driven Prabowo campaign.
Jokowi has never led a negative campaign, let alone a black campaign, so he is vulnerable to these tactics from the opposition. He has however maneuvered to get Golkar, one of Indonesia’s leading political parties, on side for the presidential run. As well as this, Jokowi still appeals to the average Indonesian as someone from a humble and relatable background who is committed to gotong royong – working together for the common good.
Indonesia has come a long way since Suharto and implemented reformasi to transform the country into a leading democracy. However, the legacy of weak institutions remains and with identity politics at play, the pendulum has the potential to swing back. 2019 will likely mark a test in tolerance for Indonesia and whether it can maintain its secular moderate democracy into the future.
Edward Parker is a contributor to The Diplomat, based in Jakarta, Indonesia. He can be followed on Twitter @EdinIndo