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Challenges Before New Government in Indonesia

Panjaj Kumar Jha was Associate Fellow at Institute for Defence Studies and Analyses, New Delhi. Click here for detail profile.
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  • August 19, 2009

    A Constitutional court recently dismissed a petition about alleged electoral irregularities filed by opposition presidential candidates Megawati Sukarnoputri and Jusuf Kalla. The decision effectively clears the decks for a second term for the incumbent president Bambang Sushilo Yudhoyono. Both Megawati and Kalla registered complaints against voting list frauds and bogus voting in the constitutional court on July 28 and demanded reelection. Previously, the Election Commission of Indonesia announced on July 25, 2009 Sushilo Bambang Yudhoyono, former General and the reform oriented leader, declared winner. Preliminary predictions about presidential elections showed that he would garner more votes than all his opponents clubbed together. Megawati Sukarnoputri received 26.8 per cent of total votes while Jusuf Kalla got 12.4 per cent of votes. Yudhoyono garnered 60.8 per cent of votes (surpassing the 50 per cent the criteria for elections).

    Yudhoyono’s reelection is likely to please both the US and Australia, which have in assisted Indonesia in decimating and arresting major Jemaah Islamiyah (JI) leaders and helping prosecute the accused in the Bali bomb blasts. This reelection would also set the agenda for the second term of Yudhoyono which might range from reforming the economy to taking major disinvestment decisions and policy changes in the energy sector. Yudhoyono’s deputy Beodino, a finance specialist, might make things easy for him by assisting him in taking financial decisions regarding economic reforms in the field of banking, equity and disinvestment of public sector companies. The fight against graft and strengthening the Corruption Eradication Commission would also be among the major challenges for the Yudhoyono government who had been lauded for its anti-corruption efforts. The frictions which have emerged between the Ministry of Finance, the Indonesian Parliament, security agencies and the Attorney General’s office because of the Corruption Eradication Commission crackdown needs to be managed carefully. He will have to appease various factions within the party, placate the bureaucracy as well as give autonomy to the Corruption Eradication Commission so as to reinforce his clean image with the Indonesian electorate.

    Yudhoyono has to simultaneously pursue anti-terror initiatives and placate his Muslim constituency which has been instrumental in passing the anti-pornography bill in parliament in 2008 and the decree against the Ahmediyyah sect. He would have to take strong measures to curb communal fissures in regions like Sulawesi, Maluku, Poso, Palembang and Lampung. Yudhoyono will host US president Obama later this year. Obama spent substantial amount of his time childhood in Indonesia. This would mean greater assistance from the US in terms of military assistance and funding for major projects in Indonesia. Though the US has only partially lifted the ban on military assistance to Indonesia but this visit might pave the way to fully lifting the ban on arms sales.

    Apart from domestic issues ranging from popular economic subsidies to decentralization of governance, Indonesia would have to carry out the restoration and rehabilitation of work in Aceh. The Aceh Monitoring Mission has finished work in Aceh on June 30 and the governance issues are now being decided by the Aceh provincial government along with Jakarta. Though Aceh has been one of the major achievements for Yudhoyono but Papua is likely to be a recurrent problem. The deaths of Freeport employees(multinational corporation involved in exploration of copper and gold mines) and the alleged atrocities by Indonesian military proved be a major embarrassment for the government especially when countries like the US and Australia are closely monitoring developments in Papua. In the past human rights issues soured relations between Indonesia and the US as well as Australia. Though at the time of the resolution of the Aceh crisis, the same formula was sought for Papua as well Indonesia rightly took the stance that Papua was not an insurgency but a matter of equitable distribution of resources and development in the province.

    The transfer of control over business enterprises of the Indonesian Army to the government would again be a major issue for Yudhoyono. Also the disinvestment of major defence industries like PT Pindad, PT Pal and PT Dirgantra would be on the agenda. The restructuring of stock markets as well as initiating further dialogue with countries like Japan, China and India for FDI would decipher the course of action for Yudhoyono. Although Indonesia has a GDP growth rate of 6 per cent for the last couple of years its unemployment rate of 9 per cent is also quite high. So the situation demands tough measures through disinvestment as well as liberalization of the economy.

    Although Jakarta maintains close bilateral relations with Islamic countries, it has to confirm its commitment to multilateral Islamic organizations like the Developing Eight (D-8) and the Organization of Islamic countries (OIC). Balancing its relations between the Islamic world and the US and Europe would be a daunting task. Among its neighbours, the Australian PM Kevin Rudd has lauded the return of Yudhoyono. Singapore would be keen to sign a defence cooperation agreement after mutually agreed amendments. Other countries in the region like Malaysia would like to iron out differences with regard to labour and illegal migration, while Vietnam would like better relations with the country so as to reap the benefits of trade and investment. With regard to countries like India and Japan which are eyeing Indonesia for their energy needs in the field of coal and natural gas, favourable negotiations would be a major challenge. Also the influx of Chinese investments and increasing volume of trade would be carefully calibrated, so as not to antagonize the domestic constituency which has been complaining about the uneven distribution of wealth. More than 80 per cent of national wealth is owned by a mere 3 per cent of ethnic Chinese in Indonesia. Apart from these issues Indonesia will need to strengthen its military and procure modern arms for its armed forces. Indonesia, with its economic growth, will play a more pivotal role in the Southeast Asian region and under the leadership of Yudhoyono things are looking bright for Indonesia.