For a retired army officer, Indonesia’s Susilo Bambang Yudhoyono is a bit of a wimp. “SBY”, as he is universally known, is notoriously indecisive. There is a palpable sense of drift about his administration, more than a year before elections that will bring to a close his decade as president. His vice-president has publicly stated that there will not be any significant reform before the government steps down. Cynics mutter that this is hardly new: There has not been any significant reform in years.
The country is on autopilot. Courtesy of its young and spendthrift population of 240 million people, the fourth-largest in the world, its economy is buzzing along considerably faster than the gridlocked traffic on the streets of its booming capital, Jakarta. In five of the past six years, it has grown more than 6 per cent. Even in 2009, when most countries were reeling from the Lehman shock, Indonesia managed a respectable 4.5 per cent growth rate.
Underlying its story is demographics. Indonesians’ average age is 28. For the next 20 years, young people will pour into the workforce and into the rapidly expanding second and third-tier cities. (When a national sports outlet opened in a back-of-beyond town in West Papua, its management was amazed to find strong demand for trainers costing $200 (Dh736 a pair.)
In a somewhat breathless report about Indonesia’s economic potential, the Boston Consulting Group (BCG) estimated the country had 74 million “middle class and affluent consumers”, a number it expected to almost double to 141 million by 2030. BCG may be stretching the definition of middle class. After all, nominal gross domestic product per capita is just $3,500. Still, consumption accounts for 60 per cent of GDP. Even if most Indonesians cannot afford to buy all that much, growth in aggregate demand spells an economic boom.
Given the favourable background, it is perhaps not surprising that the coalition government has gone to sleep. It has often ducked hard decisions. When in 2010, the much-admired finance minister, Sri Mulyani Indrawati, came under fire for squeezing the country’s crony capitalists, SBY dropped her. More recently, he has shied away from dealing with an expensive, and ill-targeted, fuel subsidy that is blowing a $20 billion hole in the otherwise well-managed budget. Nor has his government acted decisively enough to defend religious minorities.
Yet, for all the sense of political weakness, it is worth pausing and looking back over SBY’s decade in office. When he was elected president in 2004, the country had gone through several tumultuous years, starting with the 1997 financial crisis that caused 14 per cent of GDP to vanish virtually overnight. Suharto, the strongman who had ruled the country for 31 years, was driven out of office in 1998.
Before SBY was elected, several leaders had come and gone. Under him, democracy has been consolidated. No one doubts the president will stand down after next year’s election, as the constitution dictates. Power has been devolved to the regions in an authentic, if sometimes messy, experiment in decentralisation.
The nation’s finances are in robust shape despite the recent emergence of a current account deficit. Public debt is below 25 per cent of GDP and inflation is under control. Infrastructure is at last being built, though roads and ports are likely to remain hellish for some time to come. Poverty rates are falling, though still unconscionably high. There are genuine attempts to crack down on still-rampant corruption, including on some close associates of the president himself. The fact that he has not sought to block those investigations speaks well of a leader who does not like to throw his weight around.
One danger, however, is that, after a decade of relatively weak leadership, people may yearn for a strongman. Some businessmen are openly nostalgic about the Suharto years when power was centralised and it was clearer who had to be bribed to get things done. The two candidates who have already declared their participation in the presidential race both smack of the pre-democracy era. One is Prabowo Subianto, 61, a former special forces soldier who was discharged from the military after being accused of human rights abuses. Prabowo, the early frontrunner, has always maintained he acted in the national interest.
Also in the race is Abu Rizal Bakrie, the 66-year-old patriarch of one of Indonesia’s largest — and most controversial — business empires. Bakrie is the chosen candidate of Golkar, the party of Suharto.
It is not unusual for electorates in fragile democracies to opt for strongmen, especially after periods of weak leadership. That is the classic pattern of Latin America — and countries such as the Philippines and Thailand — where caudillos promising national salvation have time and again swept to power.
Yet, a young democracy though it is, there are reasons to believe Indonesia will avoid this trap. Many expect new, more forward-looking candidates to emerge before next year’s presidential election. Only recently, Joko Widodo, 51, came from nowhere to be elected governor of Jakarta, a victory based on his record of running a city in central Java. His election shows that Indonesian democracy is both vibrant and maturing. SBY can take some credit for that.
— Financial Times
