IN INDONESIA: So far so good, but hurdles ahead

From left: Straits Times foreign editor Ravi Velloor, Indonesia’s former minister of tourism and creative economy Mari Elka Pangestu, who now teaches economics at the University of Indonesia, and Straits Times Indonesia bureau chief Zakir Hussain a
From left: Straits Times foreign editor Ravi Velloor, Indonesia’s former minister of tourism and creative economy Mari Elka Pangestu, who now teaches economics at the University of Indonesia, and Straits Times Indonesia bureau chief Zakir Hussain at The Straits Times Global Outlook Forum last Friday. Dr Pangestu said President Joko Widodo has “a very strong vision and… clear idea about reforms” but is hobbled by the fact that he does not control Parliament.ST PHOTO: NG SOR LUAN

A MONTH after taking office, Indonesia’s President Joko Widodo is doing well – so far.

He has assembled a working Cabinet, set in motion bureaucratic reforms, and, most importantly, managed a huge cut in fuel subsidies without setting off public upheaval.

“All indications have been very positive,” Mr Endy Bayuni, senior editor at The Jakarta Post, said during The Straits Times Global Outlook Forum last Friday.

“He has managed to put together quite a credible Cabinet. It’s not a dream team, but they will support Joko’s vision, and they will work with him,” he said.

“And, of course, he raised the prices of fuel. He did that and, by and large, the people have accepted that reality of higher fuel prices,” Mr Bayuni said.

Indonesia last week raised the prices of subsidised petrol by nearly 31 per cent, cutting fuel subsidies which will lead to US$8 billion (S$10.4 billion) in savings.

The subsidies – which are meant to shield the poorest Indonesians from inflation but have largely benefited the middle class – account for a fifth of government spending. Mr Joko has likened these subsidies to “daily burning of cash”.

Giving her own assessment of the new President, Indonesia’s former minister of tourism and creative economy Mari Elka Pangestu said Mr Joko has “a very strong vision and… clear idea about reforms” but is hobbled by the fact that he does not control Parliament or any of the political parties in his ruling coalition.
“Really, we have an issue with Parliament when it comes to the passage of laws… and that law that you have to pass every year is the Budget,” said Dr Pangestu.

Agreeing, Mr Bayuni said: “Although President Joko is very popular, he is not necessarily a powerful president… There is the possibility of a deadlock, the possibility of Parliament blocking the President’s policies.”

Dr Pangestu, who now teaches economics at the University of Indonesia, said weak commodity prices will also weigh on the Indonesian economy. Commodities account for more than two-thirds of the country’s exports.

Minimum wages are also rising faster than productivity, she said.

She added, however, that she expects Mr Joko to draw on his experience as a “regional leader” – he was mayor of Solo city and governor of Jakarta – and forge consensus the way a chief executive would.

rdancel@sph.com.sg