THE BLOG
10/24/2014 02:48 pm ET Updated Dec 06, 2017

Indonesia's New President Should Use His Popularity To Push Through These 3 Policies

ASSOCIATED PRESS

At the start of this week, Joko Widodo took over as president of the world's third largest democracy, Indonesia. He has stepped onto a tightrope, balancing between the electorate's impossibly high expectations and the demands of a complex, deeply transactional political system. Should he slip up, he will fall into the grasp of a political old guard that is already baying for his blood.

Optimistic by nature, Jokowi (as Widodo is universally known) on Wednesday staged a press conference in a picturesque but inconvenient area of North Jakarta to announce his new cabinet. The stage was built, the portable spotlights were activated, the journalists were bussed in. Only Jokowi was missing: his cabinet line-up was scuppered after the Corruption Eradication Commission declared one in five of the proposed ministers too dodgy to serve.

It's an indication of how little room for maneuver Jokowi has within the political elite. Though his party is the largest in parliament, the coalition it heads commands just 37 percent of all seats. And though he's president, he is often at odds with the sclerotic leadership of his own party, Chairman Megawati Sukarnoputri in particular. To keep everyone happy, he's having to give cabinet posts to people he may otherwise prefer to avoid. The greatest danger for Jokowi is that he becomes utterly beholden to this elite and entombed within it.

Indonesia's new president needs to trust in his popularity and in the good sense of ordinary Indonesians. True, he won July's presidential election by just five percentage points, but his popularity has soared since. That's thanks to his opponent Prabowo Subianto, who has behaved like a sulky teenager, first refusing to accept the election results, then using the majority coalition that he heads in parliament to undermine Jokowi's chances for success. But Prabowo has done himself a disservice. His efforts to strip Indonesians of their right to vote for their district head -- the political decision which most affects people's daily lives -- has removed any vestige of support for the former general outside of the political elite.

"Look, I voted for Prabowo because I want a quiet life, and he represented stability," a man selling coconut juice alongside a railway track in Jakarta told me late last month. "And all he's done is sown the seeds of chaos and, on top of that, taken away my vote. Of course I've fallen in love with Jokowi. We all have."

Jokowi should take advantage of the current surge of optimism and popularity to push through difficult policies quickly, taking advantage of urban Indonesians' obsession with social media to take the debate out of the bubble blown by Jakarta's political elite. My own policy wish list would be:

1) Reduce fuel and electricity subsides (which mostly benefit the rich).
At the moment, Indonesia is spending 350 trillion rupiah -- around $29 billion, or 3.5 percent of GDP, on helping (mostly rich) people to fill their cars and keep their air conditioners running. The outgoing government, perhaps mindful that a cut in fuel subsidies triggered riots that eventually led to former president Suharto's demise, was particularly spineless on this issue. Other political parties, including Jokowi's Indonesian Democratic Party of Struggle (PDIP) also used this issue as a populist push-button. But as usual, Indonesian voters are more mature than their leaders.

"It's nice for me, keeps costs down," a public transport driver in Jakarta told me a couple of weeks ago of the fuel subsidies. "But it's madness for the country. The people who gain most are the ones filling their Mercy's [Mercedes Benz sedans]. It would be better to make them pay, then use the money the government saves for schools and clinics."

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Outside of Indonesia's only heavily industrialized island of Java, it's a moot point in any case, because there is virtually no subsidized fuel available. Those who really want to buy their gas at 6,500 rupiah (53 cents) a liter have to park their cars or trucks in a queue outside the gas station, and rely on SMS messages to tell them when a delivery of fuel is due -- usually once a week or so -- so that they can rush to their vehicles and nudge forwards towards the pumps. The rest of us just fill our motorbikes or cars with petrol that has seeped out the back door of the gas stations and into plastic water bottles and is for sale on dozens of roadside stalls at 10,000 a liter or more.

"It's funny, you watch the news from Jakarta, and you get all these guys sitting around talking about the impact of fuel price rises on poor people," observed one man as we both waited to fill our motorbikes at a roadside stand in the eastern island of Flores last month. "But the irony is that we poor people, we're already paying much higher prices than those big-shots in Jakarta." Cutting energy subsidies is a prerequisite for the infrastructural investment that Indonesia needs.

2) Create incentives for investment in infrastructure.
Indonesia's infrastructure is a catastrophe, especially outside of Java. Sick people have to sit on cargo boats for days to get to a hospital, and those cargo boats unload onto fishing boats because the pier has collapsed. Roads wash away every rainy season, and small businesses write blackouts into their business planning. Though the last government developed a plan to improve infrastructure in a number of major "corridors," all the incentives are stacked against investment that might make that happen.

Public investment is hampered by excessive decentralization. There are strong political disincentives for districts to get together to put money on the table for large regional investments. Private investment is undermined by a constitution that is essentially socialist -- the state must control all sectors of the economy that affect social welfare. Then there are things like price caps (in electricity generation for example) and confusing, contradictory and ever-changing regulations.

Knee-jerk nationalism, invoked by both candidates during the recent electoral campaign, makes foreign potential investors especially wary. But again, millions of Indonesians are more sensible than the small handful that inhabits the political pantheon. They repeatedly vote with their consumption patterns in favor of anyone who provides reliable goods and services of acceptable quality at a reasonable price.

3) Implement performance-based cash transfers to regional governments.
Over the last decade, Indonesia has become one of the most decentralized countries in the world. Most of the business of government -- provision of health services and education, investment in infrastructure and much else -- takes place at the level of the country's 500-plus district governments. Indonesia is a huge natural laboratory for policy experimentation, but no one seems to be watching over the petri dishes and trying to replicate the results of the experiments that work.

Most of the money to fund district-level service provision comes in a block grant from Jakarta, with virtually no strings attached. Some local governments use this very well, some very badly. Right now, there's no system for rewarding good government or punishing bad government, and there's not much systematic sharing of lessons between districts. More peer review of success and failure in service provision and rather more conditionality in funding might be a starting point for better learning and performance respectively.

Jokowi needs to use his current popularity to over-ride the objections of the crusty old men and women who sit atop Indonesia's political parties, and get on with delivering the foundational changes on which Indonesia's future will be built.

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