Monday, August 25, 2014

Indonesia: A Decade of Development

SUSILO Bambang Yudhoyono should not really look for a post-politics career in singing. At Indonesia’s national independence dinner in the presidential palace a week ago, the President gave a short, typically gracious speech welcoming guests, extolling Indonesia’s national unity and looking forward to his own imminent retirement from office.

Then he told of a decision that had been weighing heavily on his mind — what to sing at his farewell national day dinner. His decision, he said, was as final and irrevocable as that of the Constitutional Court, which a few days later would rule definitively that the presidential election had been won by Jakarta Governor Joko Widodo. The appeal by the defeated former general Prabowo Subianto, based on alleged irregularities in the vote-counting, was thrown out by the court.

SBY’s first song was John Lennon’s Imagine. His delivery was soulful, but not terribly tuneful. The title of the second selection escaped me but it had a country and western sound.

This public singing, common among Indonesian leaders, especially former military men such as SBY, is perhaps the President’s main concession to populism.

For although at times he has been popular, SBY was never a populist. Rather, across 10 years in the Merdeka Palace, he has presided with a grave dignity.

Just now, and just for a moment, you suspect, there is a feeling in Jakarta of impatience with SBY. It is very much like the mood at the end of John Howard’s more than a decade as Australian prime minister. Nobody is generous in their assessment of SBY. The focus is on what he didn’t do. There is a feeling, as with Howard and the mining boom, that good times fostered bad policies, that SBY squibbed the harder tasks of economic reform.

But the rehabilitation of Howard’s reputation has been swift. The same may be true for SBY.

The sense of disappointment with SBY is especially strong among the Jakarta liberal elite. About 10 days ago he delivered his last state of the nation address to the parliament. The politicians were gracious enough to afford him a standing ovation, but The Jakarta Post, a splendid newspaper which trenchantly espouses the modern liberal point of view, began its report by saying that experts criticised the President’s claim that he had pursued persistently pro-people development policies.

In the course of three substantial conversations with the President in the past 10 days, I explored with him his record, and his ­nation’s record, in the SBY decade.

His tone is not boastful, but he makes a solid case for his achievements in office.

“I leave my office with a sense of satisfaction that I have tried to do my best to serve the nation, and that at the end of my 10 years in ­office Indonesia is a stronger nation, a stronger democracy and a stronger economy,” he tells me in a long discussion in his presidential office.

“We had many challenges but, one by one, we fixed our problems. We resolved the longstanding separatist conflict in Aceh. We stabilised the situation in Papua. We survived the tsunami crisis (of 2004) and many other natural ­disasters.

“We reformed our economy and overcame the global financial crisis in 2008. We completed ­direct elections for all our local leaders. We fought corruption hard, not always successfully. We neutralised and disrupted terrorist groups. We pursued a more active international engagement in a turbulent world.

“These are all momentous challenges. I am just glad that ­Indonesia has steadily kept momentum as a nation.”

Of this bald list of achievements, very few would quibble with consolidating democracy, settling the Aceh dispute, improving the situation in Papua or neutralising terrorists. SBY’s critics assume these outcomes more or less as a consequence of nature without affording the President much credit, but they don’t generally deny the fact of a big improvement under SBY’s tenure.

The economy is a more contested achievement. Critics lament the lack of tax reform, the slow process of reining in wasteful fuel subsidies, the counterproductive nationalism in mining policy, the slow progress on infrastructure, the lack of deep structural reform generally.

But it is the lot of nations and of men to live in a state of imperfection. SBY cites a host of measures that gives some overall context to Indonesia’s performance while he has been President.

Perhaps the single most important is this: when SBY came to office, Indonesia’s per capita income was $US1184. Last year, per capita income was $US3490. That’s an increase not far short of 200 per cent.

“Indonesia’s economic growth has been healthy,” he tells me. “During 2009 to 2013, Indonesia managed an average economic growth rate of 5.9 per cent. While growth decreased to 5.2 per cent in the first part of 2014, we are still experiencing higher economic growth than many countries. In fact, in the G20, Indonesia has the second highest growth after China.”

It is worth looking at a few more raw figures for Indonesia’s economy. National leaders get all the blame if things go wrong, so they surely deserve some of the credit for the things that go right.

Indonesia has a chronic problem with collecting taxes, but the state budget is now nearly four times as big as when SBY took ­office. Indonesia’s foreign exchange reserves also have nearly quadrupled, to more than $US120 billion. The ratio of government debt to gross domestic product has more than halved to be 23 per cent, an extremely respectable figure for a nation at ­Indonesia’s stage of development.

On some measures, though this is more subjective, half of Indonesia’s 248 million people now make it into the middle class. Absolute poverty has declined from 17 per cent of the population to 11.5 per cent, thought this involves a very rigorous definition of poverty and tens of millions are only just, and only tenuously, beyond absolute poverty. Exports have risen under SBY from $US71bn when he took office to more than $US200bn.

Electricity capacity has doubled, while mobile phone ownership, computer ownership and internet connectivity have increased exponentially. Some of these achievements reflect merely the passing of time without major disturbance. But that in itself is an almighty achievement of government. As the developing world demonstrates, it is all too easy for a poor government to throw a ­nation’s development off path.

Economists overall suggest that while you could classify reform as anaemic, overall macro-economic management in Indonesia has been very strong, very sound, under SBY’s leadership. At the minimum, this reflects wise senior institutional and cabinet appointments by SBY and backing of the senior figures in their policy judgments.

The slowdown in the ­Indonesian economy this year reflects a nearly universal slowdown globally. SBY says: “The prolonged slow global economic growth poses a challenge to many economies, including Indonesia. Increasingly our economies are interconnected, and economic difficulties faced by one will be felt by others.

“All emerging economies are now facing difficulties. They all have a challenge in maintaining economic growth and maintaining currency stability. The monetary policy actions taken by the US Federal Reserve have impacted emerging economies, including Indonesia. Overall this year we could still get 5.5 or 5.6 per cent economic growth.”

He is optimistic that within two years, growth can be back at trend of 6 per cent or more.

SBY acknowledges that a lot of economic reform is still to be done in Indonesia. A huge portion of the state budget goes into fuel subsidies, and although these help the poor, they flow overwhelmingly to middle-class and rich people because, as Joe Hockey would attest, rich people use a lot more fuel than poor people do.

“Last year I made the decision to increase the price of petrol,” SBY says. “It was hugely unpopular politically. This year it was electricity and gas. We need to adjust the subsidy. My hope is that the new government will give the subsidy to the poor. We should not give the subsidy to the commodities but to the people who need it: the poor.”

In a country whose history has often been marred by human rights abuses, SBY is rightly proud Indonesia is not responsible for any such breach these days. He is proud of the consolidation of democracy, though he acknow­ledges this is unfinished business. He is glad intercommunal hostilities are much milder than they were before. His critics seem to take all this for granted, or almost assume that it all happened without any active involvement from the President.

After the fall of Suharto, who ruled in undemocratic fashion for 32 years, Indonesians fashioned a constitution full of checks and balances. Presidential power is limited. It is extremely difficult to get legislation through Indonesia’s parliament. No party ever has a majority and coalitions are largely notional. Legislators vote on every issue however they like and negotiate ruthlessly over each vote. A president who remains within the constitutional bounds will always struggle to get a bold reform program passed.

It’s too easy to forget SBY’s historic role as the co-ordinating minister for security under Megawati Sukarnoputri’s presidency. At that time there were still concerns about the potential for a military coup. As the senior general in Mega’s government, SBY’s presence alone made that a much less likely threat.

Then, when he became President, his standing with the military made a coup unthinkable. Now the Indonesian military shows every sign of a thoroughgoing commitment to democracy and civilian control. Indonesia is more affluent and more stable. Civil society is far more developed and ­issues of potential military rebellion seem now very distant from Jakarta.

SBY is aware of the criticism that he is too cautious. But he says maintaining a political balance within a pluralistic society and a multi-party democracy is more important. His supporters point to the sense of calm he has projected all through his presidency. He is not an emotional leader; his tone is never strident. His policy may be cautious but it is never erratic.

Indonesia today is much wealthier, more powerful and more stable than it was 10 years ago. It is assuredly not paradise. It has not reduced poverty as quickly as China has done. But this is a decade of solid social and economic achievement that has been carried out peacefully with all the demands and limitations of a new and vigorous democracy.

And in its latest election, the ­Indonesian nation has opted for another calm, non-flamboyant president in Joko Widodo, widely known as Jokowi. Like SBY, Jokowi is a centrist, a moderate, a figure of reconciliation rather than polarisation.

Tony Abbott, and the man he succeeded, Kevin Rudd, both believe SBY will be recognised in time as a great president, a great and transformative leader of Indonesia and, of course, a great friend of Australia.

It is no disrespect at all to Jokowi, who himself promises a great deal, to say of SBY: we’ll miss him when he’s gone. The Australian By Greg Sheridan, Foreign Editor, Melbourne


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