Bangkok Post

‘Fix the country first’

President Joko Widodo previews re-election strategy with an ‘Indonesia first’ pledge of domestic reform.

- By Wataru Suzuki and Erwida Maulia in Raja Ampat, Indonesia

Home to some of the world’s richest coral reefs, the remote islands of Raja Ampat in eastern Indonesia are no secret among scuba divers. But President Joko Widodo wants to make sure these and other hidden national treasures get more attention.

“The runway will be extended to 2,200 metres,” Widodo said one recent morning when the Nikkei Asian Review caught up with him on a pier overlookin­g crystallin­e waters. The only airport in the area “will be able to accommodat­e bigger planes” after the expansion is completed in 2018, the president said.

Widodo’s frequent visits to Raja Ampat and the rest of Papua — where chronic underdevel­opment has fueled a decades-long separatist movement — are part of his commitment to spreading the benefits of growth nationwide.

Shortly after taking office in October 2014 as the country’s first leader from a modest family background, Widodo launched an ambitious infrastruc­ture plan aimed at kick-starting investment and easing skyhigh logistics costs. Since then, he has conducted hundreds of in-person spot checks across the 5,000-kilometre-wide country of 17,000 islands and 260 million people.

“Every day, he goes everywhere. ... It is unbelievab­le for us,” said Cabinet Secretary Pramono Anung. “Why? Because he knows that this is a rich country with a good opportunit­y but so many problems.”

Now in his fourth year in power, Widodo only seems to be growing more ambitious.

This month his government is opening a new building in Jakarta that will bring “hundreds” of administra­tive processes under one roof. The president says it is the latest in a series of measures to make obtaining business permits and licences from regional government­s less of a chore.

This will allow the government to pinpoint “where a licence is stuck”, he said. “Is it at the provincial level, or the district level?” We’ll be able to see it.”

Since the fall of the dictator Suharto in 1998, in the wake of the Asian financial crisis that wrecked the country’s banking system, Indonesian presidents have sought to decentrali­se power away from Jakarta. But with regional authoritie­s ill-prepared to wield that power, this led to overlappin­g regulation­s and corrupt local bureaucrac­ies.

Through close monitoring, Widodo is essentiall­y shifting some of the power back to the central government to create a more efficient business environmen­t.

Widodo said his grassroots background gives him a “better and more detailed understand­ing” of how things work, compared with his elite predecesso­rs who ran the country for seven decades. The president ran a furniture business in the Central Java town of Solo before becoming the local mayor, which was his entry into politics.

His efforts are starting to pay off: Indonesia’s ranking in the World Bank’s Ease of Doing Business survey jumped from 120th in 2014 to 72nd this year, partly thanks to one-stop investor approvals.

Hendra, who runs a constructi­on materials shop in the West Papua port city of Sorong, feels the difference. “Competitio­n is getting tougher now because it has become easier to open businesses” in Sorong, drawing people from elsewhere in the country, he said.

The markets have cheered Widodo’s reforms. Billions of dollars have poured into the bond market in 2017, driven by a growing investor appetite for high-yielding emerging market assets. Fitch Ratings on Dec 21 upgraded Indonesia’s sovereign bonds, citing “resilience to external shocks” and a “concerted structural reform drive”. The news propelled the country’s benchmark stock index to a fresh all-time high.

RELIGION AND POLITICS

And yet, 2018 is shaping up to be Widodo’s most challengin­g year so far.

In early December, tens of thousands of people gathered at Jakarta’s National Monument to mark the anniversar­y of a massive demonstrat­ion that triggered the downfall of a key Widodo ally — then-Jakarta Governor Basuki Tjahaja Purnama.

The demonstrat­ion in late 2016 was widely seen as the beginning of the rise of political Islam in Indonesia. It was triggered by a public outcry against Purnama, an ethnic-Chinese Christian who stood accused of insulting the Koran in a speech. And with just months to go before a gubernator­ial election in April 2017, it created an opening for Prabowo Subianto, a former army general who lost to Widodo in the 2014 general election.

Subianto threw his support behind former education minister Anies Baswedan. Before the controvers­y, Purnama had been favoured to retain the governorsh­ip, but Baswedan rode Muslim voters’ anger to a landslide victory.

Purnama is now serving jail time for blasphemy.

The episode showed how religious passions, stirred up by the social media rumor mill, can turn an election upside down. As things stand, Widodo still enjoys much higher popularity than Subianto and anyone else who might challenge him for the presidency in spring 2019. But false suggestion­s that Widodo is Christian or Chinese helped Subianto close the gap in the final weeks of the 2014 race — something that could happen again.

Widodo, for his part, appeared to shrug off Muslim groups’ frequent rallies.

Demonstrat­ions are “nothing special. ... That is how democracy is in Indonesia,” he said with a laugh. “It’s safe. We tell them: If you engage in anarchy, you’ll face the law.”

This coming June, simultaneo­us elections in 171 provinces, cities and local districts could offer an indication of how Widodo’s foes will play the “Islam card”. West Java, home to around 20% of Indonesian voters, is considered a key test. Attempts to discredit the religious integrity of one leading candidate backed by half the members of the ruling coalition — Bandung mayor Ridwan Kamil — have already taken off on social media.

HOME IMPROVEMEN­T

Losing allies in key regions could hamper Widodo’s reform programmes and give the Subianto-led opposition momentum. The president’s best bet may be to continue chipping away at domestic problems — which could explain why, in the interview, he seemed more eager to discuss infrastruc­ture developmen­t and reforms than global issues.

On free trade, Widodo said he is still “very interested” in joining what remains of the Trans-Pacific Partnershi­p after the US pulled out, although he added that an “in-depth study is a must” before Indonesia can decide whether to go that route.

Similarly, he said he wants the Regional Comprehens­ive Economic Partnershi­p “to be agreed in 2018” but conceded “it’s not easy because all countries each have their own ambitions”.

The RCEP includes the 10 Asean members, Australia, China, India, Japan, New Zealand and South Korea.

The president played down China’s rising influence in Southeast Asia. “I think there’s no difference,” he said, adding he is interested in China’s ambitious Belt and Road Initiative “as long as it benefits Indonesia’s national interest”.

While China has aggressive­ly courted Indonesia on infrastruc­ture deals, Jakarta has its share of concerns, including over the growing number of Chinese workers in the country and a territoria­l dispute near the Natuna Islands.

At least in theory, Indonesia has the ingredient­s to be a role model for the region and the world — at a time when the traditiona­l standard-bearer, the United States, is turning inward under President Donald Trump. It is the fourth most populous country. It is a vibrant democracy. Its economic clout is increasing.

Widodo seemed to tentativel­y embrace a more active global role when the interview touched on security and the threat of terrorism. “Security, stability, peace in the world are very important. So countries should cooperate against terrorism, radicalism, [and] exchange informatio­n on terrorism — we must continue to do [that].”

But after what happened to Purnama, some observers see Widodo’s internatio­nal positions as being geared toward wooing the Muslim majority at home. This includes his recent emphasis on the persecutio­n of Myanmar’s Rohingya Muslim minority and his opposition to Trump’s recognitio­n of Jerusalem as the capital of Israel. “Indonesia is always behind Palestine to fight for their freedom,” Widodo said.

With only a shaky coalition behind him, Widodo “has to win the hearts of the people,” said Chatib Basri, a former finance minister. “The implicatio­n? The risk of populist policies can arise.”

Although Widodo has yet to declare his intention to seek a second term — he would only say that “it’s up to the people” — there are already some signs of populism and that his government, too, is turning inward.

One of his most significan­t reforms was slashing fuel subsidies at the beginning of 2015 to allocate more public funds to infrastruc­ture. But for nearly two years, the government has not raised the price of regular petrol despite a rally in crude oil prices. As a result, the state oil and gas company has lost more than US$1 billion covering the price gap, according to the company’s own accounts.

Investors are counting on more reforms to drive growth higher. For the past three years, the country’s growth rate has been stuck at around 5%. In the third quarter of 2017, the figure came in below Singapore, Malaysia, the Philippine­s and Vietnam.

“Other countries are integrated in the global economy, but in Indonesia, the source of growth is the domestic economy,” Basri said. “So even though a global economic recovery is under way, we are stagnant.”

If Widodo disappoint­s investors in 2018, the price could be high, especially with the US expected to further tighten its monetary policy. Foreign funds — crucial for sustaining economic developmen­t — could flow out of the country.

The president brushes off such concerns, saying his mission is to solve the day-to-day problems of Indonesian­s. He makes no attempt to hide his “Indonesia first” stance — a stance that sounds a lot like a re-election strategy.

“We want to fix the country first,” he said. “After domestic [issues] are solved, then we will go outside more.”

With only a shaky coalition behind him, President Widodo “has to win the hearts of the people”, says Chatib Basri, a former finance minister. “The implicatio­n? The risk of populist policies can arise”

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