Indonesia – A Time for Change

By Scott B. MacDonald

NEW YORK (KWR) President Megawati Sukarnoputri was once regarded as the great hope for Indonesian democracy. The daughter of former president Sukarno, she was expected to bring new life to the country’s nascent democratic institutions and to provide a human face of the role of government in the daily life of most Indonesians, be they among the millions of poor farmers in rural areas or the struggling urban middle class. Yet, Megawati was a disappointment to many. A sizeable majority of Indonesian voters (roughly 61% thus far in the counting) regarded her as aloof, uncaring and unable to deal with the pressing issues of corruption, more equitable economic growth and terrorism. As a result, on September 20, 2004, some 80% of the country’s eligible voters cast ballots, with a sizeable majority picking former security minister and general Susilo Bambang Yudhoyono as the nation’s sixth president since independence.

Probably Megawati’s most significant legacy will be that she presided over a very difficult period in her country’s history, maintaining some degree of national unity and being able to make a peaceful transition of power to her rival Susilo Bambang Yudhoyono following the historical event of the country’s first ever direct presidential elections.

In all fairness, Megawati did help to instill a greater sense of stability into a country still reeling from Suharto’s fall in May 1998, the concurrent economic collapse (real GDP shrank 14% during 1997-98), and the erratic tenure of President Wahid, who resigned in 2001. Indeed, it be argued that under Megawati’s brief three year administration the economy regained momentum (growing at 5% annually), inflation has become minimal, and the currency and stock markets have stabilized. Although terrorism remains a concern, Islamic radicals are hardly dictating the future direction of the country.

Why then did Megawati fail to win the elections, which saw its first round in April? A large part of the problem is that she failed to convince the majority of Indonesian voters that she really cared about their lives. Despite some moderately impressive accomplishments on the economic front, the primary concern of many Indonesians was that the pace of economic growth was not sufficient to make a dent in high levels of unemployment and underemployment, which together account for roughly 40% of the total work force.

Megawati also hurt her position with voters when she allied herself to Golkar, Suharto’s old political party, an association that tarnished her reformist credentials. In addition, the President was not helped by the perceived greediness of her husband, Taufik Kiemas, a wealthy businessman who named himself the head of a high-level ministerial delegation negotiating a multi-billion natural gas deal with China. Kiemas was not a member of the government. Along these lines, Megawati’s support among the urban and rural poor, formerly her main base, badly eroded.

Megawati also lost because her competitor Yudhoyono ran a better campaign. A former general with some training in the United States, Yudhoyono emerged in the voters’ mind as someone who would be tough on corruption and terrorism as well as take stronger measures to get the economy moving at a faster pace. He also has some appeal to foreign investors, having a reputation as being market friendly and open to new ideas.

Yudhoyono has a tough road ahead. He must appoint a cabinet, seek to introduce and implement policies that stimulate stronger economic growth, attract greater foreign direct investment, reduce unemployment and underemployment, and deal with terrorism. Potentially complicating matters, the incoming president lacks a majority in the nation’s parliament, with his Democratic Party holding only 56 seats out of 550 seats. Moreover, the largest party in the parliament, Golkar, has already indicated it will become the official opposition to the government, setting up its leader, former presidential candidate, Akbar Tandjung, as a possible power broker.

Yudhoyono will be the fourth president to follow Suharto, who was forced from power in 1998. Indonesians want jobs, public safety and cleaner government. There have endured slow employment generation, bombings and official corruption. Yudhoyono has an opportunity to break with this track record of former governments. It will not be an easy process. It requires a strong, pragmatic leader, who is willing to operate with a spirit of parliamentary government. Currently the new president will have some degree of good will from both the voters and foreign investors. He will have to move quickly to take advantage of that good will and develop some degree of policy momentum. Failure to address the country’s many challenges will only run the risk of slowing Indonesia’s return to sustainable growth and an improved standard of living for the population. Failure would also create more recruits for radical Islam. This is something that neither the majority of Indonesians or their neighbors what to see.