Jokowi a wild card for Indonesia
SEPTEMBER 24, 2013 12:00AM
IF Jakarta's reformist governor Joko "Jokowi" Widodo emerges next year as Indonesia's new president it will not necessarily weaken the protectionist push in Indonesia, says Jakarta-based economist Moekti Soejachmoen.
Economic nationalism in mining and banking, for example, has troubled investors at a time when Indonesia faces political uncertainty and economic challenges, such as rising inflation, pressure on the currency, and deterioriation in the balance of payments.
At a Lowy Institute briefing in Sydney yesterday, Dr Soejachmoen pointed out that Jokowi, the most popular albeit undeclared candidate for next year's poll, comes from a political party background that supports economic self-sufficiency and support for small traders.
"So, how can he adopt a less nationalistic (economic) policy?," she said.
Dr Soejachmoen, who took her PhD at the Australian National University, which co-hosted yesterday's forum, said the drive for self-sufficiency imposed costs.
Lowy scholar Dave McRae said the possibility of Jokowi running for president had lifted once gloomy attitudes about next year's elections. A Suharto-era soldier and businessman Prabowo, accused of human rights abuses, had been shaping as a strong contender.
But Dr McRae said it was not certain that Jokowi would emerge as a candidate to replace the incumbent Susilo Bambang Yudhoyono.
And if he were elected Jokowi, still an unknown quantity when it came to national policy, might disappoint Indonesians who had projected on to him so much hope for change and reform, Dr McRae said.
Meanwhile, Dr Soejachmoen said Indonesia's recent economic challenges had not led to serious reform because conditions were not bad enough to galvanise action and the political class was too busy gearing up for next year's elections.
Senior federal Treasury official Jason Allford told the Lowy forum these challenges were taking place "against the background of a pretty solid economy". However, long-term reforms were needed to underpin growth and lift incomes.
Asked about the view of Indonesia's peak business lobby, Kadin, that most Australian business had ignored the opportunities in Indonesia, Mr Allford said he was no expert but our level of investment there did seem "quite low".
"I would have thought that when you have a country (such as Indonesia) on your doorstep that is growing six or seven per cent per annum there should be a lot of business opportunities," he said.
"A quick look at the numbers" suggested Australia was not doing justice to these.
Is Indonesia at a crossroads?
Sep 22nd 2013, 23:50
by R.C, JAKARTA
DEVOTEES of both "The Simpsons" and The Economist will know that the former once parodied the high seriousness of the latter with a scene in which Homer, thumbing a copy, remarks: “Did you know that Indonesia is at a crossroads?” Homer's question, however, now seems worryingly apposite. In recent years the giant of South-East Asia, with a population of 240m, has been one of the best performers of the world economy, with growth rates consistently spiking above 6%. The only puzzle was why Goldman Sachs hadn’t added it to the BRICs. In the past couple of months, however, the mood has soured dramatically. The economy is stuttering and investors are getting out. On September 12th the central bank revised its growth forecast for this year down from a maximum of 6.2% to a range of 5.5 to 5.9%. So far this year the rupiah has fallen by about 16% against the US dollar and the benchmark stockmarket index is down by over a fifth since its record high in May. Is Indonesia now really at a crossroads?
Indonesia has been caught in a more general sell-off of Asian shares and currencies prompted by fears that America’s Federal Reserve will soon end (or at least “taper”) its policy of ultra-cheap money. But Indonesia, like India, has also been hit particularly hard for reasons that are specific to the country. Tumbling commodity prices, due to slackening demand from China and India, mean that Indonesia’s traditional sources of revenue, from coal, oil, gas and more, are under pressure. Yet the country has not taken advantage of its economic tailwind to tackle its manifold problems—awful infrastructure, rampant corruption and foot-dragging bureaucracy, to name but a few—that impede other sources of growth in the future. Thus Indonesia’s failure to modernise its economy is laid bare.
The blame for failing to implement reforms while the going was good can be laid at the door of the outgoing president, Susilo Bambang Yudhoyono. But at least he leaves office next year, leaving the country (and more specifically the electorate) at the proverbial crossroads. Can it elect a president next year who can summon the required political nous to push through reforms that Mr Yudhoyono failed to pass? Or is the country destined to remain one of Asia’s great under-achievers? Some of the presidential candidates have already declared themselves, but they don’t inspire much confidence, being firmly wedded to the old governing elites (and even their families). One man, however, looks very different: the governor of Jakarta, the capital, Joko Widodo, usually known by his nickname Jokowi. He has not yet declared his hand, having been elected to run Jakarta only last year. But the polls show that if he were to run—and he is likely to—he would win by a landslide.
Homer would probably like Jokowi. At 52 he is young enough to represent a clear break with the generation of politicians that came of age under the dictator Suharto, toppled in a popular uprising in 1998, and who have ruled the country since. He does not hail from any of the traditional power centres of Indonesian politics, such as the army. He is open and approachable, as well as appearing to be clean. Little wonder he is popular with younger voters. And his record as mayor of the central Javanese city of Solo shows that he is willing to try out new ideas and push them through. He is relatively untested, and he will face any number of vested interests trying to stop him doing much in government. But with Indonesia finally at a crossroads, he might be the man to give it a go.
India's Economic Woes Spread to Southeast Asia
By Bruce EinhornAugust 19, 2013
Shoppers walk through Siam Square in Bangkok. Photograph by Brent Lewin/Bloomberg
For anyone following the economic turmoil in India, the combination is depressingly familiar: A record high current-account deficit. A weakening currency. A spike in inflation. A fall in the stock market.
The same recipe that is creating India’s worst economic crisis in decades is now afflicting Indonesia, too. Consumer prices jumped 8.6 percent last month, the Jakarta government announced last week. Thanks to the slowdown in China, demand for Indonesian coal, palm oil, and other exports is falling, hurting the country’s trade balance. Indonesia has been running a current account deficit for the past seven quarters, and the central bank on Aug. 16 announced the current-account deficit had hit $9.8 billion. That’s the largest deficit ever and amounts to 4.4 percent of Indonesian GDP.
Investors in the Southeast Asian country’s stock market are worried about the parallels with India. Like India’s rupee, the Indonesian rupiah is suffering from a loss of confidence. The rupiah today fell to 10,500 against the dollar, a four-year low. The benchmark Jakarta Composite Index plunged 5.6 percent today, with volume more than 30 percent higher than the past month’s average, and has lost 8 percent of its value in the past two days. Since the start of July, the market is down more than 10 percent, making it the worst performer among the 94 global indexes tracked by Bloomberg.
In Southeast Asia, it’s not just Indonesia that’s in trouble. More bad news today came from Bangkok, with the latest economic numbers from Thailand showing that country has fallen into a recession. Thailand’s GDP contracted 0.3 percent in the second quarter compared with the first three months of the year. That’s the second quarterly contraction in a row for Thailand, which like its neighbors has suffered from a slowdown in Chinese demand.
The Asian economies are suffering as global investors prepare for the end of the Federal Reserve’s quantitative easing policy. While it’s unclear how much tapering we’ll see from the Fed and when, emerging markets such as India and Indonesia are already feeling the pressure as investors begin shifting their money back to the U.S. “Among the region’s economies, Indonesia and India are bearing the brunt of the reversal of capital flows in anticipation of QE tapering, exacerbated by domestic factors,” economists Stephen Schwartz, Weiwei Liu, and George Xu of BBVA Research (BBVA) wrote in a report published today.
While the Indian government and central bank have unveiled measures to support the rupee, investors are unimpressed, with the rupee today falling to a new low of 62.8 against the greenback. “Looking ahead,” the BBVA team wrote, “bolder structural reforms, including greater fuel price liberalization, land acquisition reforms, and higher foreign investment limits in insurance, pension management and the pharmaceuticals industry are crucial to regain investor confidence and shore up the rupee.”
Kalau Jokowi jadi presiden jua akhirnya, dan ternyata tidak bisa membuat perekonomian masyarakat negeri ini lebih baik, nasibnya akan sama saja dengan presiden-presiden sebelumnya yang "dijatuhkan" akibat kagak becus mengurusi masalah ekonomi di akhir-akhir masa jabatannya. Sukarno jatuh akibat perekonomian masyarakat memburuk dalam periode tahun 1960-1964 setelah dia melakukan nasionalisasi perusahaan asing dan mencanangkan demokrasi terpimpin. Suharto jatuh setelah kebijakan ekonomi liberalnya selama 32 tahun akhirnya terpuruk akibat krisis moneter yang menyebabkan gejolak ekonomi hebat di akhir tahun 1997. Gus Dur dilengserkan ketika perekonomian negara tak terurus baik karena dia suka jalan-jalan ke luar negeri saja. Lalu bagaimana dengan Megawati? Dia tak dipilih rakyat akibat politisinya dan rezimnya banyak sekali melakukan korupsi dan obral asset negara.
Bagaimana dengan SBY? Kalau sampai tahun depan usai Pilpres perekonomian kita baik-baik saja (baca: kebutuhan rakyat masih terjangkau dan cukup, terutama untuk makan dan bisa masih bekerja), maka masa jabatannya yang kurang setahun itu, insya Allah akan dilalui dengan 'happy end'. Tapi kalau kondisi resesi ekonomi yang sudah mulai terjadi saat ini semakin memburuk, maka diduga kuat tokoh-tokoh BSH dan 'vested interest' kemungkinan mendesak untuk dilakukan Pemilu lebih awal atau malahan berniat melakukan pelengseran SBY sebagai presiden yang sah. Kelompok BSH dan 'vested interest' akan tega melakukan hal seperti itu, karena hanya dengan cara-cara seperti itu kelompok mereka mempunyai peluang atau kesempatan bisa meraih kekuasaan tanpa harus melaluai pemilu dan pilpres, sesuatu yang membuat peluang mereka berkuasa menjadi kecil.
Tapi itu sulitlah hal itu bisa terjadi, sebab negara-negara Barat seperti AS, Eropa, Jepang dan China, satupun tidak ada yang menginginkan Indonesia kacau-balau menyusuli kejadian negeri-negeri Arab dengan "Arab Spring' yang kini sedang menjadi trend di negeri-negeri berpenduduk mayoritas muslim di kawasan Timur Tengah dan Afrika Utara. Sebab risiko kerugian mereka akan besar sekali, mengingat investasi negerinya sudah terlanjur besar di negara ini. Yang mereka inginkan hanyalah sebuah jaminan bahwa Presiden RI yad tidak akan bertindak seperti Soekarno dulu, menerapkan nasionalisme buta di bidang ekonomi sehingga sampai-sampai melakukan tindakan nasionalisasi perusahaan asing segala, dan menutup akses hubungan ekonomi dengan dunia Barat. Kejadian seperti "Arab Spring" itupun sulit terjadi dinegeri ini, sebab selama ini tak ada sejarahnya pernah terjadi konflik Sunni-Syiah secara masiv seperti di negara-negara Arab karena di Indonesia pengikut Syiah itu hanya kaum minoritas kecil saja. Di negara-negara Arab yang sekarang terlanda "Arab Spring" itu, rata-rata komposisi penduduknya yang beraliran Sunni dan Syiah, hampir berimbang.