Indonesia has been a remarkable success under Jokowi

To rewrite an old line, President Joko Widodo of Indonesia is a humble man about whom there is much to be immodest. In November he will host the G20 summit in Bali. Dignitaries and leaders will see a country that is one of the surprising success stories of developing countries in the last few years, one that has come a long way since the fall of Suharto’s dictatorship following the Asian financial crisis a century ago.

Since becoming Indonesia’s president in 2014, Jokowi, as he is popularly known, has eased sectarian tensions and contained the rising risks of religious fundamentalism. The once highly volatile rupiah has been one of the best performing currencies against the US dollar this year with relatively minimal central bank intervention until recently. The current account is in surplus, helped by a commodity boom that has boosted the country’s earnings from exports of nickel, coal and palm oil. Nadiem Makarim, a start-up billionaire with a Harvard degree who was appointed Minister of Education by Jokowi in 2019, will soon seek to push through a more inquiry-based curriculum for state schools based on the International Baccalaureate system.

Indonesia has coped better than expected with the pandemic, both in terms of health and containing economic damage. She chose not to impose a national lockdown, leaving it largely to regional governments to react if cases rose. The economy, despite its reliance on tourism, shrank just 2.1% in 2020 and is expected to grow 5.2% this year. Jakarta has returned to its natural state of appearing like a giant parking lot with mostly stationary cars amidst gleaming skyscrapers and beautiful tropical topiaries.

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When he was re-elected to a second term in 2019, one of Jokowi’s first steps was to approach the candidate he defeated in bitter elections in 2014 and 2019, former General Prabowo Subianto, and appoint him defense minister. This effectively neutralized the opposition. In a way, this coalition of interests reflects the consensus-based approach of Javanese society. Prabowo has done a good job in the defense portfolio. The Financial Times recently quoted former Singaporean minister George Yeo as describing the approach as “democracy with Javanese characteristics”: (The stance is) “’We’re going to campaign like hell, everyone knows what the relative proportions are, we’re going to be a Form a coalition cabinet… and you will get your share,” Yeo said.

This means that Indonesia’s political scene is much less divided than it has been in the past, and New Delhi’s, by the way. One of Jokowi’s first steps in 2014 was also to push development into the villages, giving them control of small funds so they could decide for themselves how to spend them. Jokowi got his start in politics successfully as mayor of Solo in 2005 and then as governor of Jakarta before running for president. But the paradox was that Indonesia’s once-respected anti-corruption agency was weakened under his tenure, even though he has somewhat geographically decentralized power. Seasoned political journalists in Jakarta describe Jokowi as personally incorruptible, just as Manmohan Singh was as India’s prime minister, but tended to look the other way to keep his coalition together and key lieutenants centralize power. The weakening of an anti-corruption agency is “a key disappointment of his tenure,” says James Bryson, director of investment advisor PT HB Capital Indonesia in Jakarta.

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But as multinationals and small and medium-sized enterprises from Korea and Taiwan have sought to diversify manufacturing and reduce dependence on China, Indonesia should benefit. Against all odds, almost exactly two years ago, the Jokowi government enacted a law that makes it easier to hire and fire employees without overwhelming companies with large severance pay demands. Bryson credits the government with recognizing that “there is competition for foreign investment.” The country is increasingly mentioned as an alternative to Vietnam as companies diversify their operations from China.

Indonesia is also trying to learn lessons from the friendly relations between workers and capitalists in 20th-century Japan as the new reforms that were expected to spark large workers’ protests come into effect. Arsjad Rasjid, president and director of Indika Energy, a major coal exporter and chairman of the Indonesian Chamber of Commerce and Industry, proudly says that for the first time at a G20 meeting there will be a joint communiqué between companies and workers. The chambers of commerce have signed memoranda of understanding with six major unions since the beginning of this year. Goals include reskilling and upskilling to enable workers to adapt to the digital age, and also moving worker housing closer to factory clusters. “If we do nothing, there will not be an industrial revolution, but a social revolution,” says Arjsad Rasjid.

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Jokowi was active on the world stage. He traveled to Kyiv and then Moscow in June to stress the need to open wheat and grain exports and lift the naval blockade on Ukrainian grain to restore food security to developing countries. Longtime observers of the soft-spoken man who started his career as a furniture factory owner would not be surprised by the initiative’s entrepreneurial spirit and pragmatism.

Rahul Jacob is a Mint columnist and former foreign correspondent for the Financial Times.

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