Indonesia

In February 2024, Indonesians will cast their vote. But what will the post-Jokowi era look like?

By Anna Affranio

Southeast Asia's political arrangements are on the brink of a momentous change, as Indonesia will soon bid goodbye to a decade of rule by Joko Widodo, the hugely popular president who has been in office since 2014. Indonesian law, in fact, allows only two presidential terms, which means Widodo will not be able to compete in the election round to be held next on February 14th.

Last October 25th was the deadline for registering presidential candidates. At present, the three pairs of candidates running for office (in Indonesia, presidential candidates always run in pairs with their respective vice presidents) are headed by Prabowo Subianto, Ganjar Pranowo, and Anies Baswedan.

This election campaign seems to follow the trend, known to Indonesia, that sees voters and the media focusing more on the charisma of leaders and agreements between oligarchs and party leaders rather than the details of political programs. However, many analysts have observed how each of the three pairs represents a different vision for what the future of Indonesia might look like. 

Prabowo Subianto, the current Defense Minister, is considered the favorite in the latest polls. The latter, 72 (the oldest among the candidates), comes from an elite family and enjoys a large following despite numerous controversies that have beset him. He has, in fact, been accused of human rights violations related to the kidnapping of pro-democracy activists during the riots that marked the country in the late 1990s, although he has always denied any involvement. He is also the former son-in-law of the late authoritarian President Suharto and in previous elections, has formed alliances with conservative Islamic groups and divisive political parties. This coalition, however, benefits from the (tacit) support of the outgoing president. Although the latter and Prabowo have had some problems in the past, the candidate has announced that he wants to continue the project of Nusantara, the new designated capital, which is Jokowi's main political legacy. Finally, the latter certainly appreciated the choice to appoint Gibran Rakabuminag Raka as potential Vice President, none other than Widodo’s eldest son.

The second candidate in the race is Ganjar Pranowo, current governor of Central Java province. Fifty-five years old, he is perhaps the one who most resembles outgoing President Jokowi, with whom he shares a humble family background and a deft ability to appeal to the masses. This is why he receives extended support among ordinary people and enjoys wide popularity among young people and social media, particularly on TikTok. In addition, he is the candidate supported by the PDI-P (Indonesian Democratic Party of Struggle), the same populist-oriented party that had supported Joko Widodo in the previous two elections. 

The third candidate, Anies Baswedan, 54, former governor of Jakarta, is losing popularity in the polls. Despite being educated in the United States and publicly declaring his support to moderate Islam, has been accused of association with the radical Islamic movement, raising concerns among religious minorities and moderate Muslims. This is related to the fact that Anies, during the 2017 Jakarta gubernatorial election, accepted support from radical Islamic groups lashing out at his opponent, then-Jakarta governor Basuki Tjahaja "Ahok" Purnama, a Chinese Christian who was later jailed for insulting Islam. 

In conclusion, this election is not only a race among candidates, but also among different ideas of the Indonesia of tomorrow: a return to the reactionary past, the continuity of a democratic polity, or a possible move toward religious radicalism. It will be fascinating to see which path the Indonesian people choose, and the coming months will be crucial in determining that choice.

Self-made man of humble beginnings, Indonesia's first president without a political dynasty or the military behind him. With only a few months left in his second and final term, Joko Widodo remains wildly popular, and his successor will likely emerge from his entourage. Outstanding story of a leader who embodies the strengths and contradictions of his country

Joko Widodo is almost always referred to by the nickname "Jokowi." Shortening names and titles or giving nicknames is a widespread habit in the spoken Indonesian language, but it seems that the president's nickname was coined by one of his French business partners. Prior to entering politics, Jokowi was involved, with some success, in manufacturing and exporting furniture made from the fine timber of the tropical forests of the Indonesian archipelago. This was, in some ways, the family business, although his father carried it out on a much smaller scale. In fact, Jokowi had been born in the home of a carpenter in Surakarta, a town in Central Java, who sold the furniture he made on the street. After studying forestry engineering, Widodo first worked in a state-owned pulp mill and then opened his own company, joining the trade association. Business did not take off at first, and in the early 1990s, Jokowi was in danger of bankruptcy, but was saved by a loan from a state-owned company. The company manages to grow through exports, mainly to Europe and, in particular, France. In short, Widodo's entrepreneurial success was built on the support of state-owned companies and exports, two elements that would later be central to his economic policy, dubbed Jokowism by some entrepreneurs.

Furniture manufacturers are an influential industry group in Indonesia, and Widodo, president of the association for the city of Surakarta, is ready to enter politics. In 2005, he won the election for mayor of Surakarta, and his administration proved extremely popular due to its tough on crime and promotion of tourism. The successful entrepreneur now mayor, however, does not forget his humble beginnings and often visits the city's slums, where he promotes social housing and access to education. Appreciated policies that Jokowi will replicate on a larger scale in his later posts. His popularity is sky-high, and in 2010 he is re-elected mayor with more than 90 percent of the vote. On the strength of that result, just two years later he aims for the position of governor of Jakarta and is elected. A position he holds for a short time, as in 2014 his party, the PDI-P (Indonesian Democratic Party of Struggle) nominates him as its candidate for the country's presidency. Jokowi's meteoric political career is built on his talent for appearing as a "man of the people" who does not forget his origins, capable of getting things done, and sincerely interested in improving the living conditions of poorer Indonesians.  

The PDI-P's choice of Widodo was exceptional for the dynamics of Indonesian politics. The then Jakarta governor was neither a former army officer like his rival, former conservative general Prabowo Subianto, nor the scion of a political dynasty like PDI-P leader and daughter Sukarno Megawati. Before him, all of Indonesia's presidents had belonged to one of two categories, but for Widodo and the PDI-P the anomaly could become the lever with which to lift the party after years of electoral debacles. Jokowi presented himself as a new man, estranged from the establishment and close to the people. Like so many other leaders in the same years, Widodo wins with a populist platform that put the fight against corruption at the center. The election was a triumph, Jokowi beating Prabowo with 53 percent of the vote and repeating the success in 2019, again against Prabowo, with 55 percent. To this day Jokowi remains wildly popular, with approval ratings around 76 percent. It is difficult to hear critical voices against the president, not least because offending him can lead to 18 months in prison, as happened to an 18-year-old Sumatran boy in 2017.

Widodo is indeed a democratically elected leader, willing to relinquish power at the end of his two terms as required by the Constitution, but he is also the leader of a "hybrid" democracy. Power is contestable in elections, but dissent is suppressed when he raises his voice too much or steps out of the groove drawn by the government. Somewhat vague laws against defamation and "blasphemy" have been written during the Widodo administration and are now broadly interpreted to restrict freedom of expression, assembly and association. Another gray page with regard to fundamental rights is a recent and unprecedented assumption of responsibility by Jokowi for certain incidents of violence perpetrated by the Indonesian state in the past. This is only a partial step forward, as the president has been silent about the crimes committed by the military during the occupation of East Timor and the violent repression still perpetrated against West Papuan natives demanding independence from Jakarta. The promise to fight corruption has also remained unfulfilled. Rizal Ramli, a longtime politician and former minister in the first Widodo government, recently wrote in The Diplomat that under Jokowi "the hands of the clock have turned back," as the president's clique has proven to be "horribly corrupt, with huge conflicts of interest." Widodo keeps quiet and lets it be, so as to keep opposing interest groups together and maintain power. Former rival Prabowo has also been co-opted as defense minister.

Despite the fact that corruption is a very serious problem and perceived as such by the public, Indonesia's economy is growing and experiencing no crisis. Jokowism seems to be working and remains popular. Mindful of his personal experience, Widodo sees the country's wealthy state-owned enterprises as a useful tool for guiding its economy and infrastructure toward its goals of economic as well as social development. In this, the president has been successfully assisted by his minister of state-owned enterprises Erick Thohir, an entrepreneur known in Italy for buying and leading Inter Milan for a number of years. Another tenet of Jokowism is the search for new markets and investment abroad. Indonesia recently held the chairmanship of both the G20 and ASEAN, placing great emphasis in both forums on trade and economic growth. And Jokowi has been able to find many investors, especially in China. Beijing's presence in the country has increased greatly, both in investment and in the presence of Chinese workers, a category that is often the victim of violence. This is a somewhat uncomfortable topic for the administration, which has been criticized in the past by the opposition for "selling out" the country to China and is now committed to keeping anti-Chinese sentiment in check.

Although it is difficult to predict who will be Jokowi's successor, he will certainly be a Jokowist in economics. Appearing in continuity with the popular outgoing president will be necessary to emerge from a still crowded pool of contenders. The two most likely names seem to be former rival, now ally, Prabowo and official PDI-P candidate Ganjar Pranowo, governor of Central Java. The two could even ally and run as a ticket, in absolute continuity with the grand coalition supporting Widodo. If Jokowi entered politics without coming from a power dynasty, he is coming out having created one of his own: his sons have already begun to groom themselves, and the eldest son is already mayor of Surakarta, the city from which Widodo's rise began. We will hear more about them. In any case, the fact that the post-Jokowi transition is taking place in a democratic manner demonstrates the strength of Indonesia's democracy, albeit a "hybrid" one. A democracy full of contradictions that required an out-of-the-box politician like Jokowi to lead it: as capable and effective as he was condescending to the corruption and vices of the system.

The long-awaited financial sector reform Jakarta has been working towards has been approved. Here is what will change

Article by Aniello Iannone

After nearly three years of negotiations, the Indonesian House of Representatives approved the Financial Sector Development and Strengthening Reform (UU PPSK) on 15 December 2022. The reform, which will change the rules of financial law, especially for the investment sector, will be managed through an omnibus law, the type used for labour reforms in 2020 and 2021 for reforms related to the harmonization of tax regulations. The financial sector development and strengthening law (PPSK), which consists of 27 chapters and 341 articles, underwent essential changes in 17 articles.

The new reform will be the gold standard for the regularisation of businesses such as venture capital, carbon markets, and cryptocurrency markets. However, it will also regularise financial institutions such as banks, insurance centres, and gold banks. In addition, the new law reforms the competencies and powers of the Central Indonesia Bank (Bank Indonesia or BI), the Financial Services Authority (Otoritas Jasa Keuangan or OJK), and the Deposit Insurance Corporation (Lembaga Penjamin Simpanan or LPS).

Under the new law, Bank Indonesia can purchase long-dated government bonds in the primary market. In practice, the central bank can print money to finance government spending in a financial crisis that could threaten the national economy. Previously, BI bought government bonds in the primary market at an interest rate, became a reserve buyer if investors failed to reabsorb government bonds, and bought domestic bonds even at a 0% interest rate. This measure, called 'burden sharing,' was practised during the Covid-19 health crisis as the pandemic hit state revenues. Burden-sharing measures should only be used when necessary. Nevertheless, the new reform has become a non-stop policy in case of an economic crisis. However, it needs to be better explained in the reform what constitutes a state of crisis, meaning that the reform could be a tool if the government needs cheap tax revenue.

Instead, a prominent role was given to OJK, which was structurally reformed. OJK Board of Commissioners increased from 9 to 11 members. Chief Supervisor of Financial Institutions, Venture Capital Firms, Microfinance Institutions, and Chief Supervisor of Financial Sector Technological Innovation for Digital Financial Activities and Crypto Activities were created. The new law allows OJK to supervise and manage fintech and digital finance activities, including cryptocurrency markets. It is precisely cryptocurrency-related activities (previously managed by BAPPEBTI, the Commodity trading regulatory body) that fall under ITSK, as new forms of technology in the financial sector must be regulated and supervised. From now on, it is OJK that must manage them. In addition to OJK and BI, LPS has also changed its role. Initially, one of the main tasks of LPS was to guarantee public deposits in banks. In contrast, the Omnibus Finance Law mandates LPS to guarantee insurance policies.

Conclusion 

Financial sector reform is long overdue in Indonesia. It aims to improve, secure, and accelerate a sector that in Indonesia, as Finance Minister Sri Mulyani Indrawati has said, relies on outdated regulations. Like other reforms, it also has some shortcomings. For example, it is still being determined who will be selected as directors of the three primary financial authorities, BI, OJK, and LPS. The law clearly states that they cannot be active leaders of political parties, but there is no actual mechanism to protect this principle. 

In the course of 2022, Indonesia switched from the chairmanship of the G20 to that of ASEAN. Jakarta has proven to be a leader for the region and an indispensable interlocutor for all players involved in the Indo-Pacific

Jakarta has never been more central to the international scene. In 2022, diplomats from all over the world worked with the Indonesian government to prepare for the G20 Summit in Bali. The city is also the seat of the ASEAN Secretariat and, from the end of 2022 and for much of 2023, will Indonesia will hold the ASEAN chairmanship. The 2022-2023 period is perhaps an annus mirabilis for Jakarta, a city that will lose its capital status in the future, as work has already begun to move the country's government to the new city of Nusantara in East Borneo. However, work on the construction of the new capital is proceeding slowly and will still take years. The project is almost a symbol of Indonesia's ambitions in the region - and of some of its contradictions. The desire to move the centre of the country from Java to one of the most peripheral areas of the archipelago. The administrative difficulties of a gigantic project. The rising sea level that threatens the old capital and the rest of the region. A name evocative of a centuries-old leadership ambition.

Nusantara indeed comes from old Javanese and means 'outer islands'. Outer from the perspective of Java, the heart of the Majapahit Empire, whose influence extended, between the 13th and 15th centuries, over the entire Malay archipelago - and in fact the concept embraces not only the territories that today correspond to Indonesia. The term has been part of Indonesian nation-building since the famous Palapa oath taken by Gajah Mada, prime minister of Majapahit, in the 14th century. The prime minister swore to refrain from eating spicy food (palapa) until he had unified all of Nusantara under Javanese authority. The idea of unifying the archipelago and the Malay-speaking peoples under one leadership was essential to the birth of the Indonesian state during the 20th century. During the Sukarno regime, the young country had come to clash first with the Netherlands and then Malaysia in order to complete the unification process of the region – without fully succeeding. Already under Suharto, these ambitions changed in nature: Indonesia was to lead Nusantara through political influence and diplomacy, not by force. The country has followed this doctrine ever since. The Palapa oath also remains part of the national rhetoric: the first satellite launched by the Indonesians in 1976 was named Palapa to symbolise the whole country's commitment to the project.

This leadership role is in some ways natural given the size of the country. By population and economy, Indonesia is the largest member of the ASEAN bloc and the only state in the region that is also part of the G20. In 2022 Jakarta held the presidency of the summit, opening a three-year period in which the summit will always take place in the Global South: after Italy and Indonesia, the presidency will pass to India and then to Brazil. The government led by Joko Widodo did not have an easy task, given the growing tensions in international politics. Russia is a member of the G20 and the membership is divided between countries that boycott Moscow and those with a less confrontational line. Despite this disagreement, Widodo invited Ukrainian President Volodymyr Zelensky to address the Bali Summit. After the conclusion of the summit, Chinese President Xi Jinping stayed for a bilateral meeting with Widodo to strengthen cooperation in various areas - particularly in infrastructure development. On the political level, Jakarta expressed its adherence to the principle of non-interference in internal affairs which Beijing champions - a significant stance given that Indonesia is the largest Muslim-majority country in the world and that China receives criticism from abroad especially for its treatment of the Muslim minority in Xinjiang. At the same time, the Widodo administration does not intend to flatten itself on Chinese positions, nor on American ones, rejecting the logic of the 'new cold war'. This is a position shared by the vast majority of governments in ASEAN and emerging G20 economies. Again, the Indonesian strategy comes from afar - though not from a concept as old as palapa or Nusantara. One of the leaders of the independence movement and future prime minister Mohammad Hatta outlined the course of the new nation's foreign policy in a speech of 1948: mendayung antara dua karang, 'rowing between two rocks' - at the time, the US and USSR, to which we could perhaps add China today.

The annual chairmanship of ASEAN, assumed by Jakarta in November 2022, also brings with it no easy challenges. The Indonesian government believes that the organisation must address two essential issues: navigating the growing rivalry between the great powers and distributing the fruits of economic growth to the bloc's nearly 700 million citizens. The strategy outlined by the Widodo administration to solve these challenges consists of three points: implementing the ASEAN Charter - in other words, sharing certain essential political choices, such as the resolution of the ongoing crisis in Myanmar -, strengthening ASEAN as an institution and equipping it with more tools to achieve energy and food security, 'medical independence' and financial stability in the region. This strategy was summed up in the slogan: 'ASEAN matters: epicentrum for growth'. The Indonesian presidency indeed seems determined to strengthen the organisation and resolving within it the aforementioned political issues shaking the region, namely the Myanmar issue and the difficult balancing between the US and China. On the economic front, Indonesia will seek to implement the ASEAN Vision 2025, thus strengthening intra-regional trade and accelerating the technological transition. Another important dossier is the accession of Timor-Lester into the organisation. Expectations for the Indonesian presidency are high, given the country's leadership ambition and some historical precedents: two key processes for regional integration - the creation of an ASEAN Community on the EU model (2007) and the RCEP trade agreement (2020) - were launched during two rounds of Indonesian presidency, in 2003 and 2011 respectively. In the months to come, we may see whether Indonesia will again be able to hold the countries of Nusantara and the rest of Southeast Asia together - through politics, cooperation and leadership.