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INDONESIA: Strategic, progressive and innovative

Article - October 15, 2014
With the rise of a new kind of leadership under the ‘common-man’ president elect, Joko Widodo, the archipelago nation and world’s third-largest democracy enters a new era filled with optimism
When Indonesians elected Joko Widodo to the highest office in the land, they were casting their votes for change from politics-as-usual. Jokowi, as most Indonesians refer to their president-elect, is the first modern Indonesian leader without roots in the country’s well-entrenched political, business and military circles, or ties to the previous authoritarian regime of Suharto, which ruled Indonesia from 1967-1998.

Unlike his predecessors, Jokowi is known as a man of the people who seeks out their advice and understands their problems, often because he has been through the same issues himself. And he has shown that he has what it takes to transform Indonesia from a country often characterized as corrupt and poor, into one of transparency, equality and progress.

Born in a slum in Surakarta, East Java, Jokowi studied forestry at university and eventually built up a successful furniture manufacturing company. As mayor of Surakarta from 2005-2012 he revamped parks, built markets, introduced a healthcare program for residents, made education more accessible, and, possibly most importantly in a country where cronyism and corruption have long been the order of the day, barred members of his family from bidding for key projects in the city.

In seven years, Jokowi turned Surakarta, also commonly known as Solo, around from a city known for violence, poor governance, high unemployment, and slack economic growth into a recognized cultural and tourism center. Jokowi eased traffic congestion, cut the red tape businesspeople have to deal with, and improved living conditions in Surakarta’s slums.

"I warmly congratulate Indonesia’s president-elect Joko Widodo. The people of Indonesia united once again to show their commitment to democracy through free and fair elections...

The United States looks forward to working with President-elect Widodo as we deepen our partnership, promote our shared objectives globally, and expand people-to-people ties between our nations”

John Kerry, U.S. Secretary of State
After seven years at the helm in the city, Jokowi was elected governor of Jakarta, and began working his magic there. The capital has been prone to traffic jams and floods for decades but Jakarta has nonetheless had a string of governors who failed to adequately address these issues. That changed with Jokowi’s governship.

He regularly visited poor parts of the city, where he talked with ordinary residents about issues that matter to them, including food prices, housing, flooding and transport. He instituted a merit-based hiring system for civil servants, published his salary and launched reforms in the education and finance sectors. And the universal healthcare system he introduced for residents of the sprawling city proved to be so popular that the plan almost backfired as hospital and other facilities struggled to cope with the sharp uptick in patient numbers.

Jokowi was nominated in March to be the Indonesian Democratic Party of Struggle (PDI-P) candidate for the presidency, and after winning 53% of the vote in July, will take the oath of office on October 20.

The election of the common-man candidate to the highest office is considered a breakthrough in Indonesia’s still young democracy.

Jokowi’s focus on ordinary Indonesians and his “can-do style of leadership” will come as “a breath of fresh air from stifling bureaucratic ineptness in many state institutions,” Brookings Institution senior fellows Joseph Chinyong Liow and Lex Rieffel wrote in a recent analysis.

In foreign policy, Jokowi wants to use Indonesia’s unique position as a maritime axis to spur development that benefits the people, Rizal Sukma, head of the defense and foreign affairs working group on Jokowi’s transition team, told The Jakarta Post newspaper.

At home, a $7.7 million order for 72 new Mercedes-Benz sedans for government ministers was cancelled this month after Jokowi said he would prefer that officials stick with the cars they already have.

But Jokowi faces numerous challenges as president, the greatest being “to assemble a working majority of political allies while maintaining his own agenda,” Liow and Rieffel wrote.

That is because Jokowi’s opponents in parliament vastly outnumber his supporters, and are expected to place hurdles in the way of any reforms the new president might want to introduce.

A key reform is the reduction of fuel subsidies and, more broadly, making the country more energy efficient. Introduced in the final years of Indonesia’s first president, Sukarno, fuel subsidies were intended to protect citizens from the impacts of inflation, which at times was running in the triple digits.

Today they eat a large chunk out of the state’s revenues – $20 billion a year, by some accounts. The subsidies have pushed Indonesia’s current account deficit to above 2% of gross national product in the first quarter of 2014, and some Indonesia-watchers predict the deficit could be as high as 3% at year’s end if the subsidies remain in place.

The fuel subsidies mean Indonesians pay some of the lowest prices in Southeast Asia for gasoline – a gallon currently goes for the equivalent of around $2.11. This makes the subsidies very popular with the people, and politicians are keenly aware of the fate of those who have gone before them who tried to cut the fuel subsidies. The end of Suharto’s 32-year presidency in 1998 was heralded by protests after he tried cutting the fuel subsidies and raised prices.

Fuel prices were last raised in Indonesia in June 2013. During his campaign, Jokowi said he would gradually cut fuel subsidies over the next few years. A member of Jokowi’s economic team, Arif Budimanta, told The Jakarta Globe that the price of fuel could go up as early as October. The Deputy Governor of the Central Bank, Mirza Adityaswara, said the price of gasoline has to go up by around 50% for the subsidy cuts to have a positive impact on the current account deficit.

Nevertheless, Jokowi’s administration has stated that it would find ways to prevent higher fuel costs from resulting in sharp rises in food prices and from impacting public transportation, and would also develop plans to allocate cash for poor people.
As Jokowi and his “crowdsourced” cabinet (Indonesians were given the opportunity to cast their votes online) turn a new leaf in Indonesia, optimism is high that a new era of growth and social inclusiveness has begun.