Economic Development

A look at Indonesia’s new cabinet

January 21, 2015


January 21, 2015

Stephen Lock

Head of public affairs, Southeast Asia

Stephen Lock is Head of Public Affairs for Southeast Asia and CEO of Edelman’s Indonesian businesses. 


For many, 2015 will reveal whether Indonesia and its new government can truly live up to the hype and expectations as Asia’s third emerging economic giant.

Indeed, this will be one of the main issues that will be discussed during the upcoming The Economist Events’ Indonesia Summit. Newly elected President Joko ‘Jokowi’ Widodo has risen to the presidency in a whirlwind of an election, which was closely contested by him and his rival Prabowo Subianto. Despite this, Jokowi has enormous popular support in Indonesia, due to his humble origins and hands on style of governing and the fact that he is a ‘man of the people’, unconnected to Indonesia’s past or traditional political elites of wealthy families and former military generals.

As he sets out on his first term, President Widido has an ambitious reform agenda aimed at boosting business and investment by streamlining regulations and speeding up permits and the bureaucratic process. The President has stated his ambition for Indonesia to have sustained growth of 7% per year, a return to a growth rate Indonesia last experienced more than a decade ago. More recently, Indonesia’s GDP growth has slowed to 5.1% for 2014 and is predicted to grow at around 5.2% in 2015 according to latest figures from the World Bank. Indonesia will need more investment if is to realize this 7% growth target and achieve its true potential. Such growth will not come from domestic consumption and Indonesia’s own productivity and exports alone.

Although the president has announced cabinet made up of a majority of technocrats, appointments from within the political establishment are of course inevitable in Indonesia’s patronage-led democracy, albeit disappointing to some hoping for a truly transparent administration. Many analysts are naturally less than impressed with the inclusion of former President Megawati’s loyalists (Megawati is the Chair of the PDI-P, Jokowi’s political party) which include her daughter Puan Maharani, her former Trade Minister Rini Soemarno, and her former army chief, retired general Ryamizard Ryacudu, the latter of whom is known for his hardline views on separatist conflicts; he is currently barred from entering the U.S. for past human rights violations.

Meanwhile, key to relations with Australia is incoming foreign minister Retno Marsudi. Such is to be expected, of course, since without the political elite or patronage from Megawati, the former furniture salesmen and mayor of Surakarta (Solo) and governor of Jakarta would have never stood a chance against the financial clout of Prabowo’s Merah-Putih (Red and White) coalition. He needs and will continue to need her support to govern effectively, but bending to her will too often may start to raise serious questions over who truly is running Indonesia.

The recent scandal over the last few weeks involving the President’s nomination to become Indonesia’s next National Police Chief has underlined this concern. It has furthered questions over whether Jokowi can truly act independently or against the wishes of Megawati. Budi Gunawan was a former close aide Megawati and served under her when she was president. Many suspicions persist over Budi’s credibility for the job considering he has faced numerous corruption allegations, most recently from Indonesia’s Corruption Eradication Commission (KPK), who have now officially named him a graft suspect.

Aside from these allegations, President Widodo has been lauded by political observers for his other appointments, namely experienced technocrats like Coordinating Minister for Economic Affairs Sofyan Djalil and Finance Minister Bambang Brodjonegoro. He has also put fighting corruption center stage, with the appointment of experienced technocrat and anti-corruption activist, Sudirman Said, to helm the graft-ridden Energy and Mineral Resources Ministry (the former Minister Jero Wacik is currently being investigated by the KPK for corruption). Lastly, Jokowi is also being praised for retaining incumbent Religious Affairs Minister, Lukman Hakim Saifuddin, in what many consider a move signaling his commitment to pursue a more religiously tolerant Indonesia.

Equally the picture that arises from the government’s early actions is also mixed.  The headline-grabbing cutting of the fuel subsidy has distracted international attention from somewhat bizarre regulatory interventions in the aviation sector (following the AirAsia disaster), imposing minimum fares; much to the advantage of the State-owned carrier.  Not to mention a threatened ban on expatriate employees not fluent in written and spoken Bahasa Indonesia, making much harder, for many foreign businesses, to invest and operate in Indonesia.

Even the new popular president is not immune from scandal, which could pull his rating, and the large trust rise in government generally, back down. The recent negative popular outcry Jokowi has endured over his mishandling of the proposed chief of police is just but one example of how high expectations can once again give way to cynicism and distrust (the appointment of the new Attorney General was another; giving a sense that Jokowi is ‘weak’ on human rights and justice policy, says the ‘left’). President Widodo, with his reputation for clean governance, has now been embroiled in his first major scandal with pointed questions over whether he is curtailing to party pressures and Indonesia’s old political patronage to maintain continued party support. So there may even be the possibility that we may have seen ‘peak Jokowi’ in popular sentiment terms.  He presently faces brickbats from the social liberal left – his core supporter base – and is still yet to achieve an effective modus operandi with the DPR (parliament) in which his coalition currently only controls a minority.

President Widodo has picked a competent cabinet and he is known for getting things done and has a track record of success. That being said, businesses must be prepared to work with the new administration and in the new political paradigm. President Widodo referred to the concept of Gotong-royong, or mutual burden sharing multiple times during his presidential run and his inauguration speech, and while some detractors may point to it as a form of economic nationalism, this concept lies at the heart of his political and economic philosophy. It is likely to be a key concept and core part of his presidency, thus it is imperative for businesses to understand and embrace Gotong-royong if they are to be successful in Jokowi’s Indonesia.

Stephen Lock is Head of Public Affairs for Southeast Asia at Edelman. He can be contacted at [email protected]

For a detailed overview and analysis of Indonesia’s New Cabinet, with profiles of all 34 Minsters, you can read and download Edelman Indonesia’s presentation here.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.

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