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Joko Widodo's battle with Indonesian self-reliance

Image credit: uyeah (Flickr: Creative Commons)

The election of Joko Widodo (Jokowi) in 2014 heralded the beginnings of a new Indonesia. With a grass-roots campaign of bold promises to fight corruption, build infrastructure and attract investment, Jokowi carried the high hopes of liberals and reformers on his shoulders.

Four years on, however, many have been disappointed by Jokowi’s lacklustre performance. But what is continually disregarded in the criticism of Jokowi are the realities he faces as leader of a country with complex political structures and attitudes about state independence.

Indonesia has developed significantly since overthrowing Dutch colonialism in 1945. It is now the biggest economy in Southeast Asia, and has been famously predicted to be a top four global economy by 2050. It is arguably one of the most successful young democracies in the world.

With the election of Jokowi, the promise of infrastructure development and investment opportunities attracted the attention of journalists, academics and political leaders throughout the Indo-Pacific. While extremely attractive to foreign investors and the international community, these facts and predications regarding the state of Indonesia’s economy are usually distributed without much context.

Since 1945, Indonesia has developed an extremely powerful political oligarchy and become obsessed with self-reliance. Part of this obsession is enshrined in the Constitution. Article 33 states that “sectors of production which are important for the country and affect the life of the people shall be controlled by the state…and exploited to the greatest benefit of the people”. These “sectors” are “the land, the waters and the natural riches”. The importance attached to Indonesian ownership and decision-making within post-colonial sovereignty is evident.

This importance can also be seen in more recent legislation. The 2009 Mining Law (Law No. 4/2009 on Mineral and Coal Mining) placed a full ban on the export of unprocessed mineral ores to ensure processing took place domestically and funded domestic markets, despite Indonesia lacking the appropriate processing facilities to do so. Its implementation was postponed as a result, and, despite his campaigning for the ban, Jokowi was forced to reverse his position in 2017 to increase exports and ease budget deficits.

The 2014 presidential election campaign itself was also extremely nationalist. Both candidates, Jokowi and Subianto Prabowo, utilised rhetoric about Indonesia’s exploitation by foreign nations to garner votes – a sentiment widely shared by the Indonesian population.

Both the 2009 Mining Law and the nationalist nature of the 2014 election are reflections of the underlying influence of self-reliance in Indonesian politics. This is an important facet of Indonesian identity to consider when analysing the economic and political rise of the country in the Indo-Pacific, especially if policy makers and political leaders are to attempt to influence its foreign policy behaviour. Indonesians seek to be extremely self-sufficient – even if it appears to severely limit their country’s economic growth.

The Indonesian oligarchy, embedded in both the political and business spheres, also plays a hugely influential role in policymaking. The country entered a world of merged business and political interests under President Suharto in 1966, who was responsible for opening Indonesia to global capitalism and exploited the resulting economic and corporate growth. Highly cohesive and complex business relationships with politically powerful families, including the Suhartos themselves, became part of the political structure, and still very much exist today. The vested interest of oligarchs in domestic capital and production has meant that they have prevented the country from opening itself to competitive foreign companies, thereby reducing investment and development in Indonesia.

This oligarchy is not only powerful, it is also resilient. In the 1997-98 Asian Financial Crisis, the Indonesian government approached the International Monetary Fund (IMF) for economic help as its exchange rate and economy began to crash. The resulting reforms implemented by the IMF launched an aggressive attack on the oligarchy and corruptive practices, including the closing of large private banks and the establishment of the Indonesia Anti-Corruption Commission. Indonesia, at the same time, transitioned to democracy, and Suharto lost the presidency. Despite this, Indonesian oligarchs adapted to the reforms, reorganised their power around new political structures, and maintained their old state-business relationships.

It is important to factor this in when considering Jokowi’s presidency. His policy decisions are not entirely autonomous, and he is operating in a political system that survived an economic crisis and the IMF’s aggressive attempts at reform. To expect one man, president or otherwise, to have reformed such a system within four years of being elected is a misplaced expectation.

This is not to say that Indonesia is forever cursed with economic and political stagnation – on the contrary, its promise is real. The recent opening to foreign universities operating in Indonesia is indicative of a nation that wants to grow and develop partnerships. However, the development of Jokowi’s presidency and of Indonesia’s emergence into an economic power will take a great deal of time. This was evident in the failure of the Australian and Indonesian governments to reach the Indonesia-Australia Comprehensive Economic Partnership Agreement promised by the end of 2017.

Indonesia is a promising country in the Indo-Pacific region, but it also has several very real factors inhibiting its ability to reach its potential. Patience and commitment should be exercised in ensuring its growth in the Asian Century.

Emily Wise is the Indo-Pacific Fellow for Young Australians in International Affairs.

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