Commentary | 06 February 2019

Jokowi must prove his doubters wrong, not appease them

Originally published in Australian Financial Review

Originally published in Australian Financial Review

On the face of it, Indonesian President Joko Widodo's flip-flop over whether to release the jailed jihadi preacher who inspired the Bali bombers should be of little concern to foreign investors.

But his vacillation over freeing Abu Bakar Ba'asyir is symptomatic of a leader who has become too wary of criticism, even as he prepares to fight for re-election in April with a large opinion poll lead over rival Prabowo Subianto.

The president's indecision has also hampered his economic policy, despite his promise when elected in 2014 to turbo-charge growth and lower the many barriers to foreign investment.

This risk-averse approach by Jokowi, as he is known, is alienating some of his most vocal supporters, rather than winning over his opponents.

That is why international investors, who remain equally enticed by Indonesia's growth prospects and frustrated by its inefficiencies, should be watching closely as the election battle heats up.

Last month, the government indicated that it would release Ba'asyir, an unrepentant 80-year-old terrorism convict, on humanitarian grounds. It was the latest of several moves by Jokowi to appease conservatives who argue that he is not sufficiently Islamic.

But, after terrorism experts and many of his more liberal-minded supporters reacted with horror, Jokowi appeared to reverse course, promising to review the decision.

Last year, Jokowi disappointed his backers in a similar fashion when, at the last minute, he chose Ma'ruf Amin, a senior cleric with conservative views, as his vice-presidential candidate over his own preferred running mate.

The appointment came despite Ma'ruf having played a key role in the 2017 blasphemy conviction of Jokowi's ally Basuki Tjahaja Purnama, an ethnic Chinese and a Christian who had been Jakarta governor.

By teaming up with Ma'ruf, Jokowi was trying to distance himself from his former confidant and dilute the attacks from the religious hardliners who have clustered around Prabowo, a tough-talking former general who lost the 2014 election to Jokowi.

Jokowi's economic policies have similarly been hobbled by his desire to neutralise opponents rather than tackle vested interests and forge his own path.

Despite high hopes from international investors following his election in 2014, progress on the economic front has been slow and piecemeal after an initial, and much praised, move to cut wasteful fuel subsidies.

Gross domestic product growth has hovered just above 5 per cent per year, well below Jokowi's 2014 ambition to get it up to 7 per cent.

A series of economic reform packages have succeeded in pushing Indonesia up the World Bank's ease of doing business rankings but investors still complain bitterly about the age-old problems of protectionist policy-making and entrenched corruption.

There has been more progress on the infrastructure front, with toll-road construction speeded up and horribly congested Jakarta finally getting an airport rail link and, soon, its first-ever metro line.

But Jokowi should have been much bolder in supporting the reforms needed to boost tax revenue, attract more foreign investment and create better jobs for the tens of millions of Indonesians who are woefully under-employed.

Prabowo has tried to highlight these economic shortcomings, attacking Jokowi for his failure to reduce extreme inequality and improve the quality of life for the many Indonesians living on the margins. Neither candidate, though, has yet set out clear measures to tackle these problems, in a policy-light election.

Many foreign investors are still hoping for a Jokowi victory, partly because they appreciate his straightforward style and focus on the economy, and partly because they would prefer to deal with a known quantity.

Political analysts say the election is Jokowi's to lose, with a healthy lead over Prabowo in most polls and all the advantages of incumbency. But a big dose of scepticism is needed given the failure of pollsters to predict recent electoral upsets from Donald Trump to Brexit and the ouster of Najib Razak in neighbouring Malaysia.

No doubt it is the fear of slipping up when well ahead that is intensifying Jokowi's caution, an affliction common to many election front-runners.

Indonesia needs much more ambitious leadership, from whoever wins.

One campaigner in team Jokowi said he previously expected the president to take on difficult reforms in a second term, without having to worry about re-election because of Indonesia's constitutional two-term limit. Now he fears that, if Jokowi wins, he could become more of a lame duck, following in the footsteps of previous president Susilo Bambang Yudhoyono, who failed to capitalise on a landslide re-election victory in 2009.

Former finance minister Chatib Basri liked to joke that Indonesia has great potential - and always will, because it will never fulfil it.

But the world is not static. Other countries such as Vietnam are upping their game in the race to attract foreign investment. And the broader challenges for Indonesia are mounting, from climate change to new technologies that could threaten already-weak job creation.

With the spotlight on Indonesia ahead of the election, Jokowi should seize the opportunity to set out a bolder vision to revitalise the economy and prove the doubters wrong rather than try to appease them.