*IBRAHIM ISA'S – FOCUS *
*PRESIDENT SBY'S "DILEMMA"*
*Thirsday, March 1, 2012*
*--------------------------*
*THE GREAT UNRAVELLING*
*The Komodo Economy *
*Corruption Everywhere*
*Indonesian Election Machinery*
*Prosecutor attacked after graft trial*
*---------------------------------------*
*Yudhoyono, on the horns of a dilemma*
*The great unravelling*
The dwindling popularity of the president and his party
is eroding the government's authority and undermining hopes of more reform
Feb 25th 2012 | /The Economist./
ACCORDING to a recent poll, Indonesians are the merriest people on
earth: a mighty 51% of respondents on the sprawling archipelago told the
Ipsos research firm that they are "very happy". It is a fairly safe bet,
though, that the president, Susilo Bambang Yudhoyono, was not one of
them, nor were members of his ruling Democratic Party. Looking at their
own plummeting poll ratings and rising political difficulties, they must
feel almost as miserable as Hungarians and Russians, the gloomiest of
the gloomy, according to Ipsos (see article
<http://www.economist.com/node/21548213> for more on this poll).
After a thumping election victory in 2009, it was only natural that the
president's standing would slip. In recent months, however, it has taken
a tumble. Having won 61% of the vote three years ago, Mr Yudhoyono was
polling as low as 42% at the end of last year. In one survey, by the
Jakarta office of the Centre for Strategic and International Studies,
only 17.3% of Indonesians said they would vote for him in 2014 if a
constitutional limit on two-term presidents did not prevent him from
running again. The president's party is also faring badly. Having won
21% of the vote in 2009, the Democratic Party (PD, after its initials in
/bahasa/) saw its popularity slump to 13.7% in a recent poll, trailing
behind its main rival, Golkar, on 15.5%. As a result, argues a senior PD
legislator, Hayono Isman, the party now "faces the biggest challenge in
its history".
The immediate cause of grief is a series of high-profile corruption
scandals. But they are only part of the story. The way the government
has handled them has increased the perception that it has gone adrift
and that the president himself has lost authority. Barely half-way
through his second term, Mr Yudhoyono already looks like a lame duck.
His ministers largely ignore him, and everyone has their eyes on the
succession. None of this augurs well for the political stability of the
region's most important country, even though the economy, stimulated by
a consumer boom and fuelled by strong demand for the country's coal and
other resources, is purring along nicely.
The corruption scandals stem largely from the arrest last year of the
PD's former treasurer, Muhammad Nazarruddin. He is now on trial for
rigging construction tenders for last year's South-East Asian games,
hosted by Indonesia, to the tune of up to $365m. That is bad enough.
Even more damaging, however, is his explanation in court that he was not
doing this for personal gain, but to raise funds for the party's
political campaigns and expenses. And he has been naming names. The
party chairman, Anas Urbaningrum, is now a suspect, as is Angelina
Sondakh, an MP, former Miss Indonesia and the party's deputy
secretary-general. Two ministers are being questioned in court and the
country's anti-money laundering agency has said that there were at least
23 suspiciously large transactions between Mr Nazarruddin and "one or
two" ministers.
Indonesians are used to reading about graft and embezzlement. Their
country remains, unfortunately, one of the most corrupt in the world.
But Mr Yudhoyono was elected mainly on a promise to fight corruption.
And even though he himself is widely believed to be clean, the drip-drip
of allegations from Mr Nazarruddin's trial will implicate more people,
further undermining the party's standing and tarnishing the president's
reputation.
There is also a lot of frustration, even within the PD, over the way in
which the president has handled the crisis. Despite demands that he
force the party chairman to step down while investigations are going on,
the president has done nothing. Instead, Mr Urbaningrum is staying put
until he has a formal legal case to answer. To critics, this is merely
dragging out the party's public humiliation.
The president's indecisiveness—timidity even—will further undermine his
authority. It adds to the impression that Mr Yudhoyono, a former
general, lacks the guile and single-mindedness to push through the
reforms he says the country needs. If Indonesia is to continue to grow
at its current lick of 6% or so a year, it must do more than export coal
and buy smart-phones. It needs better roads and ports, less corruption,
a better bureaucracy, and much else besides. Yet despite all the
promises, too little has been done, often too late. And now even less
will be.
Part of this failure is attributable to the intrinsic difficulty of
governing Indonesia at all. With a population of 238m, the country has a
highly decentralised political system, so pushing any federal reforms
through is hard. Yet the failure can also be blamed on the president's
style of leadership. Despite his own impressive personal mandates from
the electorate, as head of a six-party coalition he has always favoured
achieving consensus and keeping everyone on board over effective
government. Last year the president's own Delivery Unit, part of the
presidency charged with making sure that his wishes are carried out,
reported that more than 50% of his policies and orders were ignored by
ministers. Yet, in a subsequent reshuffle, most kept their ministries
because of their political value.
Such a weak presidency has not only sapped the momentum for reform, it
has also led to worrying nostalgia for a return to "stronger" or even
authoritarian government, Suharto-style. One sign of this is the
emergence of Prabowo Subianto as a possible successor in 2014. Another
former general, he was accused of human-rights abuses as head of the
special forces in East Timor in the mid-1990s and also as head of the
army's strategic reserve in Jakarta during the last days of Suharto. A
Prabowo presidency would surely not be the sort of legacy that Mr
Yudhoyono's supporters had in mind.
* * *
The Komodo economy – The Economist.
*Workers' protests dampen news of a ratings upgrade*
*Thick-skinned, buoyant and quick? *
IN THEIR presentations to foreign investors, Indonesian officials often
like to begin with a montage of images from their fascinating country:
the elegant mast of Jakarta's Wisma 46 skyscraper, for example, and the
vast ninth-century Borobudur monument. One presentation last year even
featured a Komodo dragon peering out of the frame.
As a symbol of Indonesia's economic virtues, these enormous and venomous
lizards, native to a couple of islands, are not obviously appealing. But
they are apt. The Komodo is thick-skinned, with scales resembling
chain-mail, and surprisingly quick. That is a fair description of
Indonesia's resilient, resurgent economy. It grew by 6.5% in 2011,
according to figures released this month, its fastest pace since the
Asian financial crisis in 1997 (see chart). Ministers are already
looking forward to Indonesia's entry this year or next into the club of
15 countries with an annual GDP above $1 trillion.
Its growth also appears armour-plated. The economy withstood the global
crisis of 2008 better than most, and so far appears little troubled by
the euro's strife. That resilience reflects the buoyancy of its home
market—exports accounted for only 26% of its GDP last year—and
Indonesia's efforts to wean itself off foreign borrowing. Net foreign
debt is now less than 10% of GDP, and Fitch, a ratings agency, believes
Indonesia's government might become a net foreign creditor by the end of
next year.
That is one reason why the agency raised the country's sovereign credit
rating in December; Moody's followed a month later. It has restored the
cherished "investment-grade" status that Indonesia's government lost
during the Asian financial crisis. The establishment is thrilled.
Government officials say all the good news should be a catalyst for
greater foreign-direct investment, which reached a record $19.3 billion
in 2011, up a fifth from the previous year. But there is danger in
reading too much into a credit rating. Maybe the government will always
pay up, but other kinds of investment will not necessarily pay off.
Indeed, some of Indonesia's fiscal austerities may have come at the
expense of the economy as a whole. The government has often struggled to
spend the money it has budgeted, even for worthwhile projects. In
2008-10 the central government spent less than three-quarters of the
money it had allocated for public investment. Sometimes the only cash
that seems to flow freely is for wasteful fuel subsidies. Part of the
improvement in Indonesia's public finances, therefore, reflects fiscal
constipation more than it does budget conservatism.
Chronic underspending is partly because of heightened scrutiny of graft
in the wake of some high-profile corruption busts, as well as
bureaucratic bottlenecks, such as the difficulty of buying land. A new
land-acquisition law passed in December should quicken spending on
needed infrastructure.
But if land is one problem, labour is becoming another. On January 27th
several thousand factory workers on motorcycles blocked a main toll road
linking manufacturing zones in West Java to Jakarta, the capital,
backing up traffic and paralysing the region's commerce. The workers
were protesting against a court ruling overturning the provincial
governor's decision to raise their minimum wage by 15.5%, to about $165
a month.
Susilo Bambang Yudhoyono, Indonesia's president, immediately
intervened—on behalf of the blockading workers. His labour ministry
asked the employers' association, which had won the court case, to back
down. The government's handling of the dispute irked foreign investors.
The South Korean embassy, according to the /Jakarta Post/, wrote to the
government, lamenting the congestion, disruption and damage to
factories. Japan's embassy complained to the police. And an official at
Taiwan's trade office warned that some Taiwanese firms would leave
Jakarta or even Indonesia. Wages, he argued, should not outstrip inflation.
Yet foreign investors protest too much. To say that wage rises should
not exceed inflation is to say that real wages should remain stagnant—in
other words, that Indonesia should never develop. Moreover, figures from
Indonesia's statistics agency suggest that the average wage for
Indonesian production workers has not, in fact, outstripped inflation in
recent years, although minimum wages have done so. So expect most
foreign manufacturing firms to cough up and stay put. Nonetheless, the
havoc has reminded overseas investors that a Komodo economy sometimes
has a nasty bite.
*Correction: *The number of countries with an annual GDP above $1
trillion is 15, not 14 as originally stated. This was corrected on
February 20th 2012.
* * *
Corruption everywhere , The Economist.
IN INDONESIA, the world's largest Muslim-majority nation, many
politicians hold open houses on the first morning of the post-Ramadan
/Idul Fitri/holiday to greet supporters and well wishers, before
spending the afternoon with their own families. Last week, lawmaker
Muhammad Nazaruddin proved to be an exception, spending August 31st in
police detention facility just outside the capital Jakarta on corruption
charges while his wife, also a suspect, remained on the run abroad with
the couple's children. Mr Nazaruddin, who is now the most celebrated
detainee in a country bursting with high-profile corruption suspects,
marked his 33rd birthday in jail on August 26th.
Only four months ago, the wealthy, handsome businessman-cum-politician
was a high-flying member of parliament. It all came crashing down in
early May after Mr Nazaruddin was implicated in a scandal involving the
construction of athletes' dormitories for the upcoming Southeast Asia
Games, which Indonesia is hosting. National and provincial government
officials, an executive from a company run by Mr Nazaruddin that won the
construction tender, as well as a fellow lawmaker from the Democratic
Party, have also been arrested or implicated. On May 23rd, a humbled Mr
Nazaruddin boarded a flight to Singapore and went on the run before
Indonesia's Corruption Eradication Commission (KPK) could request a
travel ban. He was finally arrested in the Columbian resort town of
Cartagena on August 8th and flown home.
Mr Nazaruddin's spectacular fall from grace has spotlighted the fact
that, despite being 13 years removed from the fall of Indonesian
dictator Suharto's corrupt regime in 1998, opportunistic government
officials, lawmakers and businessmen continue to collude on the awarding
of state contracts, budget funds, big business deals, and even tax
breaks in exchange for a piece of the action. This is an embarrassment
for the world's third-largest democracy and a leading emerging economy.
While Mr Nazaruddin's arrest is another black eye for parliament, the
scandal has also spread far and wide. Mr Nazaruddin was treasurer of
President Susilo Bambang Yudhoyono's ruling Democratic Party, and before
he was finally detained by Columbian immigration, he claimed from abroad
that other senior Democratic Party figures were aware of the graft
involving the dormitory project and had themselves profited by it. The
Democrats have flatly denied his claims.
Mr Yudhoyono handily won presidential elections in 2004 and 2009 on a
platform of zero tolerance for corruption, but Mr Nazaruddin has clearly
hurt the Democratic Party's image and poll ratings. While he can't seek
another term in office, the president will remain its chief patron after
he steps down in 2014. Whether Mr Yudhoyono's successor is another
Democratic Party leader remains to be seen, given that Mr Nazaruddin
implicated two potential presidential candidates in the scandal. Then
there's the future of the party itself, which was founded by Mr
Yudhoyono ahead of the 2004 elections. Without his star power on the
stump as a candidate, some believe the Democrats will crumble in
parliamentary and presidential polls in 2014.
For the most part, the Democratic Party's political rivals stood back
and watched it squirm. But after Mr Nazaruddin was brought home and
placed in detention, a group of lawmakers from rival and opposition
parties curiously visited him in jail, after which Mr Nazaruddin claimed
he had "forgotten everything" about the dormitory scandal.
It is just possible that Mr Nazaruddin will strike a deal with the KPK
and tell all about the massive web of corruption that remains a fixture
in parliament. In recent months, for example, 28 current and former
lawmakers were sentenced to prison for accepting bribes to vote for a
candidate for deputy central bank governor in 2003, before the
Democratic Party was even in parliament. If Mr Yudhoyono's rivals want
to play hardball with him over the Nazaruddin scandal, they should pause
to consider that they have far more skeletons in their own closets.
* * *
*Indonesian Election Machinery*
Steady at the ballot box
The Economist -Oct 5th 2011, JAKARTA
AT LOEWY'S, the South Jakarta hangout favoured by the city's glitterati,
the atmosphere is distinctly boom-time. An odd but amiable population of
Australian miners, local soap-opera stars, foreign diplomats, and minor
tycoons rule the roost. The impression is leisurely, if colonial—waiters
in black aprons bow obsequiously—and the sound of traffic in the outdoor
section has been banished, a minor miracle in Jakarta.
Indonesia's consumer bonanza has drawn Loewy's many foreign businessmen,
for whom the country's burgeoning middle class is looking like a
goldmine. Even more recently, the place is looking like a pillar of
economic stability, against the backdrop of distant conflagrations in
European. Don't say it too loudly, but the outperformance has been
mostly accidental. The consumer boom was the gift of an economy that
could no longer de-lever, come the crisis of 2008—total banking-system
assets had been falling since 1999 and the credit cycle was bound to
turn. A commodity binge in East Asia also made a timely appearance. But
Indonesia tends to get credit at least for political stability. If
"anybody would have asked myself and many others in '98 or '99 whether
or not Indonesia was going to Balkanise, or disintegrate, it would have
been tough to disagree, because at the time it was very gloomy," the
country's own investor relations chief, Gita Wirjawan, admitted
recently. The political fortitude of the Indonesian republic has been
upheld since then, and many think its democracy an exemplar for the rest
of the world. It's true too that the Indonesian elections in 1999 and
2004 were notable for their order, transparency and overall legitimacy.
How alarming then, that the country's political stability is being
re-evaluated, at least by one long-time observer. The 2009 contest was
marred by significant chaos, a lack of transparency, and would have
triggered far larger issues if the incumbent president, Susilo Bambang
Yudhoyono, had not won his victory by such a commanding margin, argues
Adam Schmidt in a recent essay,
"Indonesia's 2009 Elections: Performance Challenges and Negative
Precedents".
Mr Schmidt is the Indonesia chief of the International Foundations for
Electoral Systems, which monitors this sort of thing. The post-Yudhoyono
era is likely to yield closer outcomes and a prolonged and contested
affair might dispel the delightful aura of promise that hangs in the air
at Loewy's.
The most contentious issues in the 2009 vote were errors in the voter
registry. The large-scale omission of some eligible voters and the
botched records of others in effect disenfranchised anywhere from
'hundreds of thousands of Indonesians to tens of millions", according to
Mr Schmidt. The losing candidates filed a complaint with the
Constitutional Court, which only dismissed calls for a rerun on the
grounds that Mr Yudhoyono had won by a wide margin. A closer result
would have exposed the judges to greater public scrutiny, potentially
politicising the issue and calling into question the contest's legitimacy.
A second indication of 2009's election chaos was the large number of
invalid votes that were cast—around 14.4% of the total (compared to 8.8%
in 2004.) Invalid votes exceeded those received by the third
highest-ranking party (PDIP's 14.03%)—and were only slightly below the
votes cast by the second-placed party (Golkar's 14.45%). Voters were
flummoxed by the electoral commission's decree to that the ballot be
marked with a pen (/mencontreng/) rather than by punching a hole in the
ballot paper (/mencoblos/), as had been done in the past. Though a
relatively minor change, the commission chose to maintain such a rigid
interpretation of voter intent as to disqualify a large number of votes.
This will happen again in 2014 if the commission continues its tradition
of not explaining new procedures to the public particularly well.
Finally, the vote-counting process was not as transparent as it should
have been. At the polling-station level, things worked fine, but the
process by which the results reached the next administrative level were
opaque. Mr Schmidt noticed that many of the forms had been crossed out
and re-entered at various stages and that this was not really explained.
Could manipulation be at work? Certainly some candidates for the
legislative elections thought so, and complained that the final tallies
did not reflect results reported by polling stations.
Many Indonesians will dismiss these concerns as quibbles—most will never
have even heard of them. And it's not wrong to say that the bigger story
was the massive voter turnout in a peaceful poll marked by lively
political exchanges. But to what extent were major flaws covered up by
Mr Yudhoyono's thumping victory? Surely it is worrying that, according
to at least this one account, 2009 fell short of many the same voting
standards that had been achieved in 2004. A prolonged, disputed outcome
in 2014 could turn procedural wobbles into a bigger political crisis.
* * *
*Prosecutor attacked after graft trial*
The Jakarta Post – Wed, 02/29/2012 <Arya Dipa>
*Sistoyo: *Prosecutor in Cibinong Prosecutor Office. /(Antara/ Reno Esnir)/
A graft defendant, prosecutor Sistoyo, was attacked after his trial at
the Bandung Corruption Court on Wednesday.
Sistoyo, who worked with the Cibinong Prosecutor Office, suffered a
wound to his head.
A man who identified himself as Deddy Sugarda of the Anak Bangsa
organization attacked Sistoyo using rolled paper when Sistoyo left a
court room at 10 a.m. Sistoyo ducked, while an officer of the Corruption
Eradication Commission (KPK) pointed a gun at the attacker.
Deddy then disposed of the paper, which apparently concealed a 20-meter
machete.
"He betrayed our country. He should punish people but now he is
punished," Deddy said on Wednesday while being taken to a police car.
During the trial, Deddy waited outside the courtroom while handing out
papers containing details of an anti-corruption campaign to journalists.
Sistoyo's lawyer Firman Wijaya protested the incident and questioned
security at the corruption court.
"I will meet the court chief to protest this incident. This is
harassment against the court. This incident is outrageous," Firman said,
adding that he would also report the incident to the Judicial
Commission, the National Commission on Human Rights and the National Police.
The KPK caught Sistoyo accepting Rp 99.9 million (US$10,890) from a
defendant named Edward in November last year. (swd)
* * *
------------------------------------
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