Indonesia’s Jokowi Show
Which Jokowi's which?
How is he faring for investors 18 months in?
Politically, the still-young presidency of Indonesia’s Joko “Jokowi” Widodo has already had at least three acts – one promising, one disappointing and one somewhat hopeful. But they all remain fundamentally prologue.
In the first act, a young leader emerges from rural Java and upends Indonesian politics by going from modest businessman to small-city mayor to governor of Jakarta and then president. He infuses his supporters with hope for a better day free of the corruption, mismanagement and lost opportunities that have held Indonesia back.
When Jokowi was sworn into office in October 2014 it seemed almost a miracle that this humble force for change had taken the reins of power. Those first months were marked by concern about his ability to forge an effective government without a traditional political power base but also great hope in this new leader.
The second act begins in early 2015, with executions of foreign drug convicts, political infighting and a crisis in the National Police force. As the global picture turned more sharply negative over China fears and falling commodity prices, Indonesian economic policy became even more sharply restrictive against foreign companies than it was under the previous government. Regulators acted seemingly without coordination or coherence and investors began to question the direction of the government and even their commitment to Indonesia.
Third Act Changes the Show
In July-August 2015, we see a third act emerge. With the rupiah softening toward 15,000 to the US dollar (its worst level since the 1998 Asian financial crisis) and GDP growth weakening to below 5 percent, there was finally talk of real reform, a cabinet reshuffle put in place brought some new economic leadership and the president pledged to get serious about attracting investment and spurring growth. By the end of the year, eight “packages” to “deregulate” one of the region’s most restrictive economies had been introduced and while few of the measures are sweeping enough to change the game, investors and the public began to see a president who seemed finally to be serious about growth.
On the job training
No one is sure what the next act will be. Jokowi seems more confident and hands-on in recent months, but the bureaucracy resists meaningful change and the loss of rent-seeking advantages for favored local interests. Politically, the government remains divided into camps. Vice President Jusuf Kalla is seen to be at odds with the president. Jokowi’s own political party, the Indonesian Democratic Party of Struggle (PDI-P), and its chairperson Megawati Sukarnoputri, is barely supportive of his leadership. Once the president’s closest advisor, retired general and current coordinating politics and security minister Luhut Panjaitan has lost much of his luster by involving himself in the battle to control the future of US mining giant Freeport McMoRan’s Grasberg gold and copper mine. The president has been lucky that the House of Representatives, controlled by the opposition, has not stood forcefully in his way.
Propelled into office as an outsider with little connection to the levers of power used by traditional elites, it is hardly surprising that Jokowi has found the road to running an effective government difficult. He had no prior experience in national government has quite literally had to learn how to be president while serving in office.
His carefully cultivated air of being an outsider also fueled considerable confusion among the public and political insiders. Is he really a democratic reformer out to slay the twin dragons of corruption and bureaucratic malaise? In his early months in office the assumption that he was a bold corruption fighter was sorely tested when the enormously popular Corruption Eradication Commission (KPK) saw its powers diminished in a fierce and public battle with elements in the National Police loyal to former President Megawati Sukarnoputri, who chairs Jokowi’s political party.
Insiders referred to the battle over the police as a Megawati “coup” after her handpicked choice for National Police chief was brought down by corruption charges filed by the KPK. After the officer, Budi Gunawan, was removed from consideration for the top post his allies in the notoriously corrupt force launched charges against the KPK itself, badly crippling it for months. The charges were quashed and Budi ended up the No. 2 in the National Police and he was widely seen to be running things from the deputy chief’s chair. It was a profound distraction.
Jokowi, whose candidacy was foisted on an unsupportive Megawati, seemed powerless to do anything about the maneuverings in the police force and many of his supporters were bitterly disappointed at the time.
Similarly, the president’s support in early 2015 for two rounds of executions of mostly foreign drug convicts – several of whom had been on death row for years and had credible claims to either new evidence or rehabilitation – shocked foreign governments and human rights organizations. The seeming urgency to execute foreign convicts while numerous high-level Indonesian police officers have been implicated in the drug trade seemed only to fuel the image of Indonesia as hostile to foreigners.