Asia in 2016: Indonesia

Indonesia recorded a fiscally promising 2016, with solid gross domestic growth and a supportive monetary environment bolstering economic momentum.

Elected to office barely two years ago, President Joko "Jokowi" Widodo has been focused on improving the economy through public spending and a welcome cabinet re-shuffle in July which saw the widely respected Sri Mulyani Indrawati, a former World Bank managing director, return as finance minister. Third-quarter GDP rose 5.02 percent compared with the same period in 2015 while a tax amnesty program has repatriated an additional 99 trillion rupiah (US$10.5 billion) to Indonesia.

The growth in the economy is owed in part to strengthening commodity prices, up 18 percent in the first 11 months of 2016, according to the International Monetary Fund. For the past few years, dampened markets have plagued Indonesia, which primarily exports natural gas, iron ore and palm oil. The Bank of Indonesia’s successive monetary easing provided additional stimulus, although the rupiah’s fall caused officials to consider a pause in relaxation by year’s end. The Indonesia Stock Exchange’s benchmark index rose 15.3 percent in 2015, the second-best-performing market in Asia and exceeded globally only by the Brazilian, Russian, Thai and Canadian bourses.

Indonesia’s growth, however, has been against increasingly polarized and regressive social attitudes. Jakarta Governor Basuki Tjahaja Purnama, popularly known as Ahok, went on trial for blasphemy in December after asking voters not be misled by Islamic leaders who were using the Koran to convince them that “Muslims should not be led by non-Muslims.” The election of Ahok, an ethnic-Chinese Christian, to such a powerful post symbolized the onset of a truly secular state but his trial underscored the dominance of hardline Muslim groups and their influence in the political sphere. Other examples include a legislative proposal to ban alcohol throughout Indonesia, and a clerical edict to prevent Muslims wearing “Santa hats” at Christmas.

One of the most prominent social debates in 2016 concerned Indonesia’s gay and transgendered communities. In January, Muhammad Nasir, Indonesia’s Minister of Research, Technology and Higher Education, called for the expulsion of students who “engage in disgraceful behavior like making love or showing affection.” The next month, Vice-President Jusuf Kalla urged the United Nations Development Programme to deny funding to lesbian, gay, bisexual and transgender community organizations in the country. The UN body had set aside US$8 million to support LGBT-related campaigns in 2016 across Southeast Asia, including Indonesia. President Widowo disavowed his cabinet colleagues’ statements, urging police to protect LGBT citizens.