Issues and Expectations for Indonesia’s Incoming President

Election Outcome Shows Democracy Has Taken Root

On July 22, as scheduled, Indonesia’s General Elections Commission released the official results of that country’s presidential election. The victorious ticket was that of Jakarta Governor Joko Widodo and his running mate Jusuf Kalla, who received 70,997,833 votes, 53.15% of the 133,574,277 votes cast. Prabowo Subianto (a former military officer) and Hatta Rajasa got 62,576,444 votes, 46.85% of the total count.

Widodo’s 8.4-million-vote lead was large, but the Subianto camp challenged the results, filing an appeal with the Constitutional Court alleging irregularities. On August 21 the court ruled unanimously to reject the appeal, and Widodo’s victory became final.

Both within Indonesia and elsewhere, some people feared that there would be large-scale irregularities in the vote-counting process. Exit polls conducted on election day, July 9, showed Widodo with a 3% lead. The fear was that the official tally announced about two weeks later would throw the race to Subianto and that this would set off major disturbances around the country.

As it turned out, though, the vote-counting process conducted by the General Elections Commission was highly transparent, and thanks also to the work of outside election monitors, there were no improprieties on a scale large enough to affect the outcome. This was very good news, and it showed that democracy has taken root in Indonesia.

Top of the Agenda: Policies to Avoid the “Middle-Income Trap”

Widodo and Kalla will take office on October 20. It will be a while before we see the makeup of the new president’s economic and national security teams. But the key issues that the incoming administration must address are clear. The top priority is the economy, which is now at a major turning point. Over the years since the 2008 global financial crisis, Indonesia has enjoyed high growth rates thanks to the combination of the United States’ quantitative easing policy and the boom in commodities like coal and palm oil. But the US Federal Reserve Board is already moving to taper off its massive asset purchases, and the slowdown in China’s economy is causing commodity prices to sag.

Indonesia’s per capita national income topped $3,500 in 2012. Keeping the country’s economy expanding while avoiding the “middle-income trap” will be a major policy priority for the new administration. Middle-income countries are those with national incomes from around $3,000 to $12,000 per capita; the “middle-income trap” refers to the experience of countries that get caught at this level and find themselves unable to advance to high-income status, as in the case of Brazil, whose economy stagnated in the 1980s and 1990s.

In order to avoid this trap and keep up its economic growth, creating good jobs and improving people’s living standards without letting the wealth gap widen, Indonesia will need to promote the development of its farming, forestry, and fishing industries. At the same time it must develop its manufacturing sector into one that can generate greater added value as part of international value chains by promoting the integration of its economy into regional production networks. And for this purpose it will be crucial to improve the nation’s infrastructure, including electric power, roads, seaports, and airports, to develop its small and medium-size enterprises and upgrade its industrial base, and to improve education, with a particular focus on the development of human resources for industry.

Maritime Security: Working with the United States, Japan, and Australia

Another key policy field is foreign relations and security. Over the next 10 years the economic growth of emerging countries will transform the balance of wealth and power both globally and regionally. During the era of President Suharto (1966–98), Indonesia’s biggest security concerns related to separatism and other challenges to national unity and domestic order. Taking the Japan-US alliance as a given, Indonesia crafted its defense policy with little attention to maritime or air power. But the internal threats to the country’s security have greatly receded: East Timor is independent, the separatist movement in Aceh has ended, and the sectarian violence that broke out in places like Maluku and central Sulawesi after the collapse of the Suharto regime has quieted down; also, the police forces have managed to basically contain the Islamic militants who carried out suicide bombings in Bali and elsewhere.

On the external front, by contrast, China has been taking unilateral actions to press its claim to a large portion of the South China Sea, and though Indonesia’s territorial waters do not overlap those claimed by China, there are grave concerns about its ability to exercise effective control over its exclusive economic zone. So the Indonesian government needs to devote greater resources to its maritime defense, work together quietly with the United States, Japan, and Australia, and exert leadership in this sphere within the Association of Southeast Asian Nations.

To judge from Widodo’s campaign pledges, it seems that he intends to tackle these issues when he takes office. His platform cited infrastructure improvements and promotion of the agricultural sector as key priorities, and he is also conscious of the need to hike defense spending and modernize the country’s naval and air forces. In other words, the incoming president has the political will to address these matters. The question is whether the new administration will be capable of doing so—and if it is, how quickly, comprehensively, and systematically it can act.

A Record of Accomplishment

Indonesia’s political system changed dramatically after the fall of Suharto. At the national level, the president no longer wields the sweeping powers that Suharto held; institutionally the legislature is now more powerful than the executive branch. And local governments have come to enjoy a high level of autonomy.  

The most recent national legislative elections further narrowed the differences in the numbers of seats held by the many parties represented. And even if Widodo manages to win the backing of a coalition with a solid majority, he cannot expect the legislature to do his bidding. International investors are strongly hoping for revisions of current labor and mining laws, but it will be extremely difficult to get such revisions enacted. 

Another concern is the relationship between the new president and vice president. Kalla, Widodo’s running mate, previously served as vice president during the first term of incumbent President Susilo Bambang Yudhoyono (2004–9), and he exercised considerable political power in that capacity. Some worry that he will pursue his own agenda without deferring to Widodo’s wishes.

Widodo, who was born in 1961, entered politics in the post-Suharto period as the mayor of his hometown, Surakarta (also known as Solo), a former royal capital in central Java, and achieved great success in promoting local economic development. He became governor of Jakarta, the nation’s capital, in 2012. His rise represents the emergence of a new type of political leader in post-Suharto Indonesia—a politician who does not come from the army, like many Indonesian leaders, but builds a record in public administration as the chief executive of a local government and then moves up to the national level. Widodo has the political skills to capture people’s hearts and takes a pragmatic approach to policy. Let us hope that he will be able to lead Indonesia to steady economic growth and to the further strengthening of its role in East Asia’s diplomatic and security affairs.

(Originally written in Japanese on August 22, 2014. Banner photo: Jakarta Governor Joko Widodo, who will become president of Indonesia this October. ©AP/Aflo.)