John Mcbeth, Senior Writer

Yudhoyono's decade of missed opportunities

After previous administrations subdued ethnic conflicts and the worst of the terrorist threat in the early 2000s, simply maintaining stability and relative economic prosperity over the next decade was never going to be enough for a country with Indonesia's vast potential.

Other danger signs were there. Fluctuating oil prices and declining domestic production meant fuel subsidies would become an even heavier burden, while serious shortcomings in education and infrastructure were clear obstacles to future economic growth. Measured against those parameters, Dr Susilo Bambang Yudhoyono ends his two-term presidency far short of the goals he should have set himself with two successive electoral mandates any world leader would treasure.

Previously, it would have been tempting to say he leaves the glass half-full. After all, as economist Hal Hill points out, in an age when grand rhetoric often substitutes for good policy, how many other middle-income states stack up as well as Indonesia?

But the way Dr Yudhoyono let himself down in the final weeks, first by refusing to raise fuel prices when he had nothing to lose and then by allowing an erosion of democratic values, has left many analysts feeling less than charitable about his legacy.

Indonesia's people can be proud of the fact that when Mr Joko Widodo takes over from Dr Yudhoyono next Monday, it will be the fourth peaceful transfer of power - and the second between directly elected presidents - since the country embarked on its democratic transition in 1998.

But they deserve better. Managed properly, Indonesia should be growing at a consistent 7 to 8 per cent, instead of the 5.7 per cent it averaged under Dr Yudhoyono. While per capita income may have tripled in the past decade to US$3,475 (S$4,400), and Indonesia is finally on the verge of joining the trillion-dollar economy club, new jobs in the formal sector remain at a premium and income inequality has widened to a record level.

Dr Yudhoyono inherited a still-fragile economy in 2004 that was on the cusp of the commodity boom and, with broad macro policy settings already in place, all he really had to do was choose competent people to do the rest.

The caution that economic managers have exercised since the 1997-98 meltdown, in keeping with Dr Yudhoyono's own mindset on almost everything, was one of the reasons Indonesia survived the 2008 global financial crisis largely unscathed. But if the President took the credit for that, he spoiled it all by refusing to own the 2008 Bank Century bailout decision, leaving respected finance minister Sri Mulyani Indrawati and central bank governor Boediono to twist in the political wind.

Dr Yudhoyono could have put the whole subsidy conundrum to bed, but he kept backing off as the media - domestic and foreign - foolishly hyped scattered street protests and a few burning tyres into nationwide unrest. It was never anything of the kind.

The same with the polls, which the President often paid too much attention to by most accounts - including one survey showing 80 per cent of respondents opposed to a fuel price increase. What did anyone expect?

The US$32 billion in savings resulting from the scrapping of energy subsidies could have been spent on upgrading antiquated infrastructure, which for road and rail alone has meant soaring logistics costs and a related lack of competitiveness. Little wonder that Indonesian businessmen are among the most concerned of all the 10 member states about the freer trade and integration that is supposed to come with the implementation of the Asean Economic Community next year.

As it was, Dr Yudhoyono's government spent less than 4 per cent of gross domestic product on infrastructure during his time in office, the effects compounded by an equally timid approach to other structural reforms. Little was done to wind back labour market excesses, agriculture stagnated and, in riding a wave of excessive nationalism, his efforts to move from a reliance on commodity exports to value-added manufacturing brought much of the mining industry to a halt.

For all of the money being spent on education, a constitutionally mandated 20 per cent of the national budget, there has been no appreciable dividend. Previously grossly underpaid teachers are a lot happier, but there has not been a corresponding improvement in quality.

Dr Yudhoyono's single biggest achievement - and one where he showed backbone and spent considerable political capital - was the 2005 Aceh peace agreement, even if it was hastened by the 2004 tsunami disaster and smoothed along by political and military allies. The resolve he showed then was in stark contrast to his subsequent failure to protect minority rights, standing idly by as Sunni Muslim radicals closed churches and carried out attacks on the Ahmadi sect and small Shi'ite colonies. His blithe acceptance of an international religious tolerance award last year rightfully outraged critics.

Paradoxically, while the seemingly endless fight against corruption claimed an ever-growing list of public officials, it also landed on Dr Yudhoyono's own doorstep, with seven members of his ruling Democratic Party jailed or under indictment. Even his younger son, the party secretary-general, is under a corruption cloud. Indeed, investigators may be waiting until Dr Yudhoyono leaves office before taking further steps in the case, which would be deeply embarrassing.

With courage and fortitude, Dr Yudhoyono could well have become Indonesia's greatest president. Instead, the debate among historians will focus on a decade of missed opportunities and a man who may have kept the ship on course, but has been a disappointment to those with greater expectations.