Has Indonesia’s Jokowi lost his direction?

Photo: Joko Widodo official Facebook page

By Zofia Reych

It has been nearly two years since Joko Widodo, former ‘slum child’ and now star politician, became the President of Indonesia. Although his election was laden with controversy, Jokowi was welcomed globally as another progressive leader in the ASEAN region. However, as Indonesia’s growth rate continues to hover below 5%, some have begun to question the efficiency of his administration.

Jokowi also managed to estrange many of his supporters by initially not standing up for the country’s most trusted institution, the Anti-Corruption Commission (KPK). The proposed revision law, pushed forward by Jokowi’s ruling PDI-P party, was designed to curb the KPK’s reach, a move that enraged the nation and brought anti-corruption protests to Jakarta’s streets.

After heated public debate, Jokowi finally put the law on hold in February this year. But this then brought into focus the internal conflict between the president and the PDI-P.

With so little control over the party that put him forward in the presidential election, and even less control over the House of Representatives, the president suddenly appeared a weak figure on the complicated stage of Indonesian politics.

And as the country’s economy continues to underperform, Jokowi remains under the constant scrutiny of the public, the opposition and even his fellow party members.

Just a couple of months after Jokowi’s election, the rupiah fell to its lowest in nearly two decades, and ASEAN’s biggest economy came to a staggering halt. Critical opinions started piling up, and Jokowi responded with special packages aimed at preventing a recession. Twelve installments of stimulus packages have been rolled out so far.

Earlier this month, Bank Indonesia amended its forecasts for year-on-year growth for 2016, from the range of 5.2–5.6% to 5.0–5.4%. There is still room for the government to fulfill its promise of 5.3% economic growth, yet it increasingly seems to be only a pipe dream.

Jokowi’s packages are presented as a panacea for low levels of household consumption, a lack of non-government spending and a global recession. Even if implemented correctly though, they might not have sufficient strength to battle all these.

The “even if” factor is particularly worrying as the Indonesia government is known for its crippling bureaucracy, and for poor integration between the capital Jakarta and less developed regions.

Knowing that government stimuli might not be enough, Jokowi signed a special decree described as a “Big Bang liberalisation” of the economy, with a particular focus on easing foreign investment rules.

Under Jokowi’s plan, global e-commerce giants such as Amazon or eBay, previously fully absent from the country due to strict regulations against foreign investors, will help to boost Indonesia’s economy.

In theory, these steps could work. But the reality is likely to dampen their effects.

The economic slowdown has already led some major companies, including Chevron Pacific Indonesia and Ford Motor Indonesia, to announce layoffs on a great scale, leading to major protests across the country.

New investors are unlikely to be tempted by an economy with collapsing demand, especially as faster developing countries in the region invite foreign capital with low operating costs.

On top of that, Indonesia’s complicated policies and bureaucracy are known to impede development, an example being the country’s first bullet train. The Chinese project was put on hold, first in 2015, and then again this year, due to land acquisition problems. Inauguration ceremonies held by Jokowi to celebrate the modernisation of infrastructure and the creation of workplaces became nothing but populism.

Apart from immediate measures to bolster the Indonesian economy, Jokowi has also ambitious, long term plans for the country but so far his bold bid to make the country into a maritime superpower have not yet come to fruition – that is, beyond the creation of a bilateral forum with Japan which, in itself, has yet to yield any results.

At the domestic level, huge investments have been made to revamp Indonesia’s ports and drive domestic trade, as well as exports – a part of Jokowi’s fading economic nationalism. However, his maritime policy is mostly focused on international relations. Jokowi’s ambition for Indonesia is to become a guardian of peace in both the Pacific and Indian Oceans.

For now, the polls suggest that Jokowi has regained the popularity that wavered in the first months of his presidency. The public recognises how difficult his position is in context of still rampant corruption and in-party conflicts.

Yet it cannot go unnoticed that his steps have so far have had very little impact on growing inflation and dramatically decreased consumption.

His policies seem to lack a broader strategy, but they are at least aimed at tackling the economic slowdown from many angles. Only time will show whether the current administration, hindered by internal altercations over power, can effectively battle the recession, and whether Jokowi’s superstar status can survive his government’s apparent shortcomings.