Forging right team for next phase
Published on Jul 28, 2014 6:01 AM
Indonesian President-elect Joko Widodo has begun to address deficiencies and policy mistakes that are inhibiting the expansion of a Group of 20 economy which ought to perform better than it has. Heading his action lines is the creation of conditions for manufacturing and commerce to thrive: roads, ports, air and shipping links. It goes without saying that dependable electricity and water supplies are also vital for industry.
Next is a paring back of subsidies that consume a fifth of the budget, which in turn tend to put pressure on the currency. To supplement those funds that will be released for more productive use such as in education and health, he will improve tax collection through online filings to reduce the scope for evasion and graft. There are also hints of another look at hindrances to foreign investment, common in sectors like mining and banking. All this will take Indonesia to the next level faster than is the case for most Asean nations, as its GDP growth depends less on exports than domestic demand. Its consumer base is huge and mostly young.
The agenda setting is an indication of Mr Joko's confidence even as he faces a legal challenge by the defeated candidate. Much like this procedural hurdle that he will have to navigate, the combative and often disruptive nature of institutional governance in Jakarta can upset the best laid plans. Put simply, the test will be in the implementation. Bureaucratic and parliamentary stasis brought the current president's reform programme almost to a halt in his second term. To break the tendency of civil servants at all levels - central, provincial and district - to act at cross-purposes, Mr Joko should surround himself with an able Cabinet and advisers who can impose their will on the public service so as to keep a fix on the goals set.
Ministers should be picked for the value they bring to their jobs, although coalition building for ease of passing legislation will require a measure of quid pro quo. Selection of provincial heads is also critical as the state administrative system is heavily devolved. Ministries that deal with project and investment approvals, for illustration, need to be closely supervised by the central economic secretariat. If they are "captured" by private business interests with an axe to grind, national goals will go out of the window.
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