Friday, November 11, 2016

Indonesia's Widodo, a maverick no longer

Hamish McDonald

Bakrie was ousted and replaced by Setya Novanto, who was forced to resign as parliamentary speaker last year after a secret recording showed him trying to shake down the country's largest gold and copper mining company, Freeport. Setya duly brought Golkar over to the government side. Two Islamist-oriented parties followed.

In July, Widodo followed up with a cabinet reshuffle that handed out small rewards to the new recruits while ruthlessly putting down ministers who had proved too argumentative or popular for his liking.
Former army general Luhut Panjaitan was demoted from his post as co-ordinating minister for political, legal and security affairs, which had allowed him to look like a prime minister. His new co-ordinating position covers maritime affairs and natural resources, which supervises key economic sectors, while his high-profile old job has gone to former military commander Wiranto, leader of a small coalition party.
Widodo dropped two noted reformists. One was Anies Baswedan, the education minister and a former university rector who was trying to raise standards. The other was Sudirman Said, a former anti-corruption campaigner, who as minister for petroleum and mineral resources had tackled endemic graft in the energy sector.

The major positive step was the return of economist Sri Mulyani Indrawati as finance minister, a post she had occupied under the previous administration of President Susilo Bambang Yudhoyono until her crackdown on tax avoidance, involving Golkar's Bakrie among others, got her sacked, followed by her departure to a senior World Bank job.

Economics takes priority

Sri Mulyani's appointment aside, the new ministerial line-up suggests Widodo has subordinated questions of human rights and corruption to his goals of lifting Indonesia to a higher economic growth path through infrastructure projects and increased exploitation of maritime resources.
Elevating Wiranto raised eyebrows around the world. In 2003, United Nations investigators indicted him for crimes against humanity over the actions of soldiers under his command during East Timor's independence vote in 1999.

The focus of Widodo's anti-corruption policy is now "prevention" rather than punishment, which makes Jakarta's political establishment much more comfortable. Meanwhile, Budi has been given a powerful position as head of the National Intelligence Agency, or BIN, which has both domestic and foreign roles.
Warburton calls it a "new developmentalism," echoing themes of the former military-backed strongman Suharto, though now in a democratic setting. Widodo's trade and investment policies also draw on Indonesia's persistent leanings toward economic nationalism and state capitalism. The rebound in Widodo's poll rating shows this is striking a chord with the public.

Yet Widodo seems to have built conflict into his cabinet. His minister for state-owned enterprises, Rini Soemarno, is trying to consolidate the 119 SOEs into more efficient groups in each industrial sector, while making sure they get the lead role in big infrastructure projects despite most of them lacking capital and technology, being excessively bureaucratic and headed by incompetent political appointees.
Sri Mulyani, however, has been handed responsibility for this huge task as Megawati has blocked Soemarno from appearing in the parliament since last year because of personal antagonisms. The policy also faces problems if Widodo pursues his stated aim of having Indonesia join the Trans Pacific Partnership, which bars member countries from giving preference to their SOEs in contracts.

Government intervention

Government decisions on investments are also slowing projects. In March, Widodo overruled a decision by the petroleum ministry to approve a plan by a consortium led by Japan's Inpex and Shell to develop the Abadi natural gas field in the eastern Arafura Sea by using a floating plant to produce 7.5 million tons of liquefied natural gas annually.

Instead, Widido ordered the partners to pipe the gas 170km across a deep and unstable sea trench to an onshore plant in the remote and undeveloped Tanimbar islands. The change is expected to delay the project up to four years, and add $4.5 billion to the previous $14.8 billion development cost -- assuming Inpex and Shell still see it worth developing.

Now that his own standing is more assured, Widodo's immediate political task is to help his former Jakarta city hall deputy, Basuki Tjahaja Purnama, retain the governorship of the capital city in local elections in February. Basuki is of Chinese descent and a Christian in a mostly-Muslim city where some imams are already saying voting for him would be haram (sinful).

Since the Jakarta governorship was his own springboard to the presidency, Widodo wants to prevent a more popular candidate from winning while also loyally helping his trusted and capable former deputy. Appointment of the controversial Budi as BIN chief was the price he paid to Megawati to persuade her party to support Basuki instead of another candidate.

As it is, Basuki is facing two strong opponents. One is the sacked education minister, Anies Baswedan, who is now backed by Prabowo's opposition party, the other is Agus Harimurti Yudhoyono, an army major who is the son of former president Yudhoyono.

If Basuki suffers an election defeat, it might suddenly make Widodo look more vulnerable as he seeks re-election in 2019. In the meantime, he is riding high using conventional political tactics. As Chatib Basri, a former finance minister, told the ANU conference: "Every president after six months becomes a normal president." It has just taken Widodo a bit longer.

Hamish McDonald is a former correspondent in Jakarta, and author of "Suharto's Indonesia" and "Demokrasi: Indonesia in the 21st Century".

 This article first appeared in The Asia Strategic Review on 17th October 2016

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