Here have been many discussions about the changes in Indonesia following the fall of former President Suharto and the end of his New Order regime. Indeed there are several positives. The return to democracy with direct presidential and legislative elections as well as regional elections, is one. An expanding middle class and freedom of the press are some of the other major reformations that have taken place.
In addition there have been a series of reforms that have restored confidence, to some extent, in governance. Among them, the establishment of the Corruption Eradication Commission (KPK) to address the major challenge of graft, decentralisation of political power that granted local governments control over education, health, environment and other areas
But rapid development has its pitfalls and there have been several obstacles the country has faced. Corruption is widespread and has even reached the ranks of the Commission that was set up to prevent it. The courts have often been subject to graft – increasing the challenges to development.
But where does the country stand now, two decades after the reformation? Where do we go from here?
These sentiments were echoed at a recent Jakarta Foreign Correspondents Club (JFCC) panel.
Jusuf Wanandi, Senior Fellow and Co-Founder , CSIS noted that even after these two decades, the political and economic situation had not stabilised. and that institutions took a long time to be established. The legal system was at its weakest, he noted and bemoaned the lack of stability in general.
Rizal Ramli, Economist and former Minister in the Wahid and Widodo governments shared similar views, albeit stronger. Criticising the slow economic growth he said that financial indicators were not good and that the balance of payments at (-3.9) was not a good indicator of development. He disagreed with international reports which he claimed were largely optimistic, noting that global issues had a negative impact on Indonesia (such as the Iran nuclear deal). Critical of the lackadaisical response of the government he said, rather damningly, that “we need a democracy that works for the people”
His strongest criticism, however, was about what he called the “criminal democracy” currently in place and blamed it on a U.S. style of governance; calling instead for a more European or Australian model where parties were financed by the state.
Eugene Galbraith, Deputy President Director of BCA discussed the role of finance and the opening of the banking system after 1998 which allowed greater access to foreign exchange. “The role of the state is greater now than before,” he intoned but noted that with no clear set of guidelines between the public and private sectors, it was unclear how to deal with situations tactically.
”Where we are now the Indonesian polity is trying to deal with its, there is too much private sector dominance. Combined with a President who is an outsider.” Comparing it to 30 years ago in 1988 (referring to the package of reforms that deregulated the banking industry), he noted that the country was currently between two bookends. The reforms of the 1980s and the reforms since 1998. where external stimuli has changed.
Perhaps the most positive comments came from James Castle, Founder and General Manager, Castle Asia who began by mentioning the role of former President B.J. Habibie who, he felt, should be given more credit for shepherding the economy in the days after the fall of Suharto. Also of note was that there was no military takeover unlike with other countries who faced similar situations. He also mentioned decentralisation’s role as a positive for the country which would have been much fractured if it had not been passed. With money flowing out of Jakarta now, the country was in a good fiscal situation from a macro perspective, he noted.
However, he noted that Indonesia’s self-imposed isolation and not being part of the global trading system might hamper future growth. “It needs courage to break the log jam,“ he noted.
Social and sectarian issues plague Indonesia at the moment and hamper its growth, but if economic policies were to be updated and a more liberal stance taken, the next two decades might garner a far more positive outlook.