Indonesia at the crossroads

It is a straight fight in Indonesia's presidential election, but much rides on the choice that voters make on July 9, for both the country and the region. While much is expected of South-east Asia's largest economy, there are also abundant pitfalls a new team must avoid to take Indonesia to the next level.

The number of middle-class and affluent Indonesians may almost double to 141 million by 2020, in the view of the Boston Consulting Group; the archipelago of 250 million already has more billionaires than Japan, according to Forbes. Heady times beckon, especially if the fruits of prosperity are shared equitably in a nation where nearly half live on less than US$2 (S$2.50) a day.

That future is premised on good governance above all. Indonesians will doubtless weigh this when deciding which of the two teams can best deliver the economic and social goods - Jakarta governor Joko Widodo and former vice-president Jusuf Kalla or ex-army general Prabowo Subianto and former minister Hatta Rajasa.

Admirably, Indonesia saw a vibrant form of democracy flower in the years after strongman Suharto's fall from grace in 1998. Political parties multiplied, civil society groups grew, and political and fiscal decentralisation was achieved. Ironically, these have partly contributed to the pall cast over the second term of President Susilo Bambang Yudhoyono's largely successful leadership. As hundreds of districts acquired resources and power, corruption became decentralised as well and embroiled Dr Yudhoyono's party, among others. And as many parties contributed to the fragmentation of support, he was unable to push through essential reforms. It would be a pity if the same fate befalls his successor. As Dr Yudhoyono once told his countrymen: "The bright future that lies ahead is ours to lose."

To compete economically, the nation badly needs more public and private investment in roads, ports, rail transport and electricity grids. However, investor confidence is being shaken by a wave of economic nationalism, for example, restriction of resource exports and reviews of all contracts with foreign companies. What is needed instead is sustained policies to improve education and vocational training, attract investments from outside, and create more jobs.

It is also hoped the next president will remain open to the world in the conduct of foreign relations. Indonesia's quiet diplomacy in the region has been hailed in many quarters in the past. Often cited are efforts to hold Asean together and initiatives like the Bali Democracy Forum. The region as a whole would benefit if it remains a key global player and shows it is determined to fulfil its considerable economic and social potential.