Chaos and Consolidation

The April 2009 legislative polls exposed weaknesses in Indonesia’s electoral management, but the results will help to strengthen the democratic polity

Marcus Mietzner

Reason to party: supporters of President SBY and his Democrat Party campaigning in Yogyakarta Danu Primanto

Indonesia’s parliamentary elections, which were held across the archipelago on 9 April 2009, were an important litmus test for the maturity of its post-1998 democracy. To begin with, the quality of Indonesia’s electoral management had been questioned before the polls, with many observers predicting that the ballot’s legitimacy could be at risk. Whereas both the 1999 and 2004 elections had been widely praised as being free, fair and competitive, there were serious doubts about how professionally managed the 2009 polls would be. Second, Indonesians were curious as to whether Yudhoyono’s Democrat Party would become the first government party since Suharto’s fall to win a national election. In the two previous ballots, neither Habibie’s Golkar nor Megawati Sukarnoputri’s PDI-P (Indonesian Democracy Party of Struggle) had managed to turn incumbency into electoral victory.

Finally, commentators also speculated about the possible impact of important electoral reforms – most notably, the introduction of a parliamentary threshold and of a fully open party list – on the stability of Indonesia’s party system. This article discusses the outcome of the elections against the backdrop of the three pre-election concerns, concluding that while a slight decline in the quality of democratic procedures did take place, other trends indicate a further consolidation of Indonesia’s 11 year old democracy.

The quality of elections: satisfactory but declining

As the third election after the end of authoritarianism in 1998, the 2009 ballot has been of particular importance to Indonesia’s democratisation. While the 1999 and 2004 polls were supported by high levels of post-autocratic enthusiasm and many millions of dollars of foreign aid, the 2009 election occurred in a much less dramatic political environment. Accordingly, the elections were a test case for Indonesia’s ability to hold high-quality elections as a routine procedure rather than as the climax of historic political change.

The elections were a test case for Indonesia’s ability to hold high-quality elections as a routine procedure rather than as the climax of historic political change

The preparations for the elections didn’t augur well in this regard. First of all, the newly appointed KPU (General Election Commission) consisted of largely unknown bureaucrats who had some experience in organising district-level elections, but lacked the expertise to run one of the largest electoral operations in the world. Significantly, the KPU recruitment committee had disqualified several respected academics and NGO activists in the first round of the selection process, basing its decision on an arguably irrelevant psychological test rather than on screening the candidates’ knowledge of electoral issues. As a result, the KPU’s inauguration and electoral planning were accompanied by much public cynicism, with many analysts forecasting the failure of the elections before the Commission had even begun its work.

The KPU was only partially to blame for the weaknesses in electoral preparations, however. Arguably, the government and the legislature were at least equally responsible for the many shortcomings. Most importantly, they had contributed to the organisational chaos by driving an initiative to reduce the costs of general elections. In 2004, the total budget for the elections had been 56 trillion rupiah (US$5.3 billion), which was drawn from both national and local budgets. By contrast, the new electoral laws stipulated that the 2009 elections had to be funded exclusively by the national budget. Consequently, the KPU submitted a budget request for 48 trillion rupiah (US$4.6 billion), triggering widespread public anger over this ‘outrageous’ demand. Led by Vice-President Jusuf Kalla, who had always argued that elections in Indonesia are too costly, the political elite began to cut the budget for the 2009 ballot.

Final numbers have not been released yet, but the KPU eventually planned its operations based on a budget of 14 trillion rupiah (US$1.3 billion), while asking regional administrations to contribute additional funds. Therefore, many crucial budget items were reduced – the allocation for computer-based tabulation of votes, for example, was only a third of what had been provided for in the 2004 budget. Not surprisingly, the tabulation proceeded much more slowly than five years earlier.

The combination of inexperienced KPU members and reduced electoral budgets was most manifest in the problems surrounding the voter registration process. According to the law, the KPU had to verify the government’s civil registry lists by going door to door in order to rectify mistakes in the official documents. However, only a very small budget was granted for this activity, forcing the KPU to largely rely on the government data provided to it without verifying it independently. For that reason, the voter lists issued by the KPU were ridiculously outdated. Many voters had moved residence since the last election in 2004, but their names were still included in the voter lists compiled at their previous locations. When these voters subsequently tried to vote in their new neighbourhoods, they found that they were ineligible.

Voter turn-out dropped from 84 per cent in 2004 to 71 per cent in 2009

Partly because of these problems, voter turnout dropped from 84 per cent in 2004 to 71 per cent in 2009. This decline, in turn, was exploited by parties with poor results to dispute the legitimacy of the elections. Arguing that tens of millions of voters had been deliberately kept away from the ballot booths, they threatened to boycott the presidential elections in July 2009 if their demands for revotes were not heeded. Unable to collect credible evidence for their claims, however, most parties quickly dropped their protests.

The speed with which challenges to the elections’ legality were abandoned indicates that even most of the losing parties and candidates accepted the general fairness of the ballot. To be sure, they did not have much choice. Before the elections, most polling organisations had predicted a result similar to that finally announced by the KPU. In addition, four ‘quick counts’ published by Indonesia’s most respected pollsters on election night differed only slightly from the official end result. Given these numbers, dissatisfied party leaders found it difficult to argue that the elections did not reflect the overall will of the electorate.

Hence, the Constitutional Court received far fewer official complaints than initially feared. The Court had prepared itself for a flood of lawsuits, calculating that – like in 2004 – it would be handed an average of 20 challenges by each participating party. This would have resulted in 880 cases; however, the number of cases it eventually received was ‘only’ 595, with an additional 28 complaints filed by candidates for the DPD (Regional Representatives Council).

There is no doubt that the overall quality of the ballot was lower than in 1999 and 2004. In almost all areas of electoral management, the level of professionalism, transparency and consistency declined

While the elections did not end in the organisational and political disaster that many had envisaged, there is no doubt that the overall quality of the ballot was lower than in 1999 and 2004. In almost all areas of electoral management, the level of professionalism, transparency and consistency declined. Given that the 2009 polls were expected to signal the routinisation of electoral democracy in Indonesia, this should be a source of concern. Apparently, both Indonesian policymakers and international aid agencies have begun to take the continuation of Indonesia’s democratic consolidation for granted, leading them to reduce their political and financial support for the elections.

Foreign donors, for example, have gradually cut their electoral assistance budgets for Indonesia from US$100 million in 1999 and US$85.4 million in 2004 to only US$15 million in 2009. Similarly, Indonesian politicians have constantly complained that the money used to fund elections could be better spent on health, education or infrastructure programs. These are early warning signs that awareness of the importance of credible elections in Indonesia is waning, both domestically and abroad. Clearly, a reinvigorated commitment to high-quality ballots – and the budgets necessary to conduct them – is necessary to avoid further slides in Indonesia’s electoral professionalism.

Yudhoyono’s victory and democratic consolidation

Women folding up ballot papers for the local and national parliamentary elections in Yogyakarta. For each paper, they are paid 75 rupiah (just under one Australian cent). About 900 million ballot papers were produced for the 2009 parliamentary elections Danu Primanto

Despite the decline in the technical quality of the elections, the results have in fact helped to consolidate Indonesia’s democratic polity. For the first time, an incumbent government party was able to come first in a post-Suharto legislative election, indicating significantly increased levels of public satisfaction with the effectiveness of governance. Whatever one thinks of President Yudhoyono and his party, after two defeats for incumbents in 1999 and 2004, a third successive loss would have seriously questioned the ability of Indonesia’s governing elite to meet the expectations of voters.

The success of President Yudhoyono’s Democrat Party, which almost tripled its 2004 result to 20.9 per cent and became the largest party in parliament, was therefore an important milestone in Indonesia’s democratisation.

Yudhoyono’s victory demonstrates that Indonesian voters not only enjoy punishing unpopular incumbents, but also like to reward those they see as successful and trustworthy administrators

The Democrat Party’s victory was all the more remarkable since only one year earlier, Indonesia had witnessed an unprecedented outpour of nostalgia for the authoritarian but effective rule of former long-time autocrat Suharto. While many Indonesians mourned the death of their former president in January 2008, the popularity of Yudhoyono had plummeted. Opinion polls revealed that most Indonesians viewed Suharto as the most successful president in the country’s history, raising doubts as to whether democracy would be able to sustain itself. Yudhoyono’s victory has mitigated these doubts, demonstrating that Indonesian voters not only enjoy punishing unpopular incumbents, but also like to reward those they see as successful and trustworthy administrators.

The strong support for Yudhoyono’s moderate Democrat Party – as well as for other parties representing the political mainstream – has further strengthened democracy as ‘the only game in town’ in Indonesia. Voters have overwhelmingly backed parties that unambiguously defend the current democratic system – much in contrast to Indonesian elections in the 1950s, when the electorate opted mostly for anti-system parties that promoted alternatives to Western-style parliamentarism. In 2009, not a single party publicly declared that it intended to establish a different political system if it came to power.

However, some of the parties that participated in the election were suspected of hiding non-reformist agendas behind the mask of their pro-democracy rhetoric. For example, former general and Suharto son-in-law Prabowo Subianto, who heads Partai Gerindra (Party of the Great Indonesia Movement), has paid lip-service to democratic principles, but most observers believe that his election as president would lead Indonesia onto the path of neo-authoritarianism. (See article by Dirk Tomsa in this edition). Similarly, the ex-commander of the armed forces, Wiranto, has pledged his loyalty to the democratic system, but leaders of his Hanura Party (People’s Conscience Party) have privately stated their ambition to roll back democratic reforms achieved since 1998.

Whatever their intention, the election results were a clear rebuttal for the two ex-generals. After their parties only received 4.5 and 3.8 per cent of the votes respectively, Prabowo grudgingly entered the presidential race as running-mate to Megawati Sukarnoputri, while Wiranto agreed to run as vice-presidential candidate to Golkar’s Jusuf Kalla. Neither ticket stands a realistic chance of winning, however, further reducing the likelihood of a neo-authoritarian turn in Indonesia in the foreseeable future.

Despite helping to consolidate the political centre, the 2009 election results also exposed some less promising trends. Most significantly, Yudhoyono’s Democrat Party partially owed its victory to a large-scale cash handout to millions of poor citizens prior to the elections. These payments had initially been presented in mid-2008 as compensation for rising fuel prices, but were continued even after the cost of fuel declined substantially later in the year. In addition, the government increased its operational payments to schools, asking them to no longer charge parents registration fees and other surcharges. Similarly, free health services were offered to poor Indonesians.

None of these initiatives – which cost the state more than US$2 billion – were introduced as part of long term economic development or poverty eradication programs. Instead, they appeared to be timed specifically to coincide with the pre-election period as a crude attempt to buy the support of poorer voters. While the 20 million Indonesian families benefiting from the assistance were obviously enthusiastic about the unexpected windfall, economists and civil society activists were mostly unsupportive. Economists did not believe that the measure would stimulate growth or reduce poverty, and anti-corruption groups disapproved of the use of state funds for electoral purposes.

Despite these criticisms, Yudhoyono’s short-term introduction of populist, pro-poor policies before the 2009 elections is almost certain to serve as a strategic model for future Indonesian ballots. With the Democrat Party’s support rising dramatically after the cash payments began in June 2008, Indonesia’s political elite will want to replicate this ‘success’ next time around – regardless of its consequences for the overall state of the economy.

Impacts of electoral reform

One of the most anticipated outcomes of the parliamentary ballot was the extent to which newly introduced electoral reforms would lead to changes in the socio-political composition of the legislature. In particular, observers were eager to ascertain whether these revisions to the election laws would increase the number of women in parliament or help to marginalise entrenched party elites in favour of political newcomers.

Initially, the new regulations had stipulated that seats would be allocated based on both party ranking and majority vote, and that every third candidate on party lists had to be female. However, in December 2008 the Constitutional Court declared this system unconstitutional, ordering the KPU to distribute seats only to those candidates with the most votes, regardless of party ranking or gender. This decision angered women’s groups, who argued that without affirmative action female candidates would find it difficult to get elected. Conversely, some civil society groups praised the court for throwing the electoral race wide open, threatening party leaders who in the past had exclusively relied on their rankings to win seats.

The number of women in the legislature rose from 10.7 per cent in 2004 to 18 per cent

Eventually, however, all societal groups could be satisfied with the result of the elections. For instance, 65.1 per cent of members of the 2009 parliament are newcomers, indicating a healthy balance between novices and experienced party leaders. The number of parliamentarians under 50 years of age increased from 49 per cent in 2004 to now 63.2 per cent, disproving the widespread view that Indonesia faces serious problems with its political regeneration. Similarly, the number of women in the legislature rose from 61 (10.7 per cent) in 2004 to 101 (18 per cent), and while this is less than women groups had hoped for, it nevertheless demonstrates that female candidates were not as disadvantaged by the fully open party list as initially feared.

Another much-discussed aspect of the elections was the alleged rise of television celebrities as a new political class in Indonesia. Prior to the elections, it was widely believed that the electoral reforms would mostly benefit actors, models and news anchors who had decided to run for parliament. With their high levels of name recognition and likeability it was assumed they would find it easy to gain the most votes in their electoral districts. Some observers even talked about the imminent Philippinisation of Indonesian politics, partly referring to the very prominent role of celebrities in politics there.

But the eventual results for the celebrities were much less compelling than the pre-election hype had suggested. Out of the 61 stars and starlets standing for election, only 15 gained seats. The party with the most celebrity candidates, PAN (National Mandate Party), saw only two of its 18 celebrity nominees winning office. Accordingly, while so-called ‘artis’ will be more influential in Indonesian politics than they were in the past, they are still far away from having the political significance their counterparts in the Philippines enjoy.

The most important impact of the changed electoral laws has been the remarkable concentration of the Indonesian party system. Due to the newly introduced parliamentary threshold of 2.5 per cent, by which only parties gaining above that portion of the vote are awarded seats in the national parliament, the number of political parties represented in the national legislature has dropped from 17 in 2004 to only nine.

With only nine parties competing for support, Indonesia is now steadily moving away from the atomised multi-partyism it has practised so far

Most importantly, the threshold will create a significant disincentive against the formation of splinter parties in the future. Previously, many internal conflicts in larger parties had been ‘resolved’ by the transformation of one of the quarrelling factions into a new party. These tiny parties would then be content with winning one or two seats in the national parliament, plus a few dozen more at the provincial and district levels across Indonesia. While the thresholds for local parliaments will only be imposed gradually in 2014 and 2019, the additional hurdle to gaining seats in the national legislature is certain to reduce the number of political parties in the longer term. This consolidation of the Indonesian party landscape will shorten the decision-making process in the legislature and simplify the organisation of elections. With only nine parties competing for support, Indonesia is now steadily moving away from the atomised multi-partyism it has practised so far. From the perspective of Indonesia’s democratic consolidation, this is certainly a welcome development.

The elections and democratic consolidation

Voters making their choices in Yogyakarta Danu Primanto

The 2009 legislative elections have left a mixed legacy for further democratic consolidation in Indonesia. On the one hand, the quality of electoral management has declined, leading to lower voter turnout and challenges to the legitimacy of the ballot. With international attention declining, Indonesia is at risk of taking elections for granted and thus neglecting the careful preparations and significant investments needed to run them credibly. While there is little doubt that the 2009 results reflected the overall will of the voters, Indonesia can’t afford a further deterioration in the quality of elections if it wants to maintain its international image as a successfully consolidating democracy.

But despite the slump in electoral professionalism, the 2009 polls also exhibited some encouraging features. For the first time, an incumbent government party has won a post-Suharto election, voters have shunned parties with neo-authoritarian platforms, the elected parliament is arguably Indonesia’s youngest and most gender-balanced ever, and the party system has undergone a healthy process of concentration. Given that some observers had predicted chaos, violence and institutional breakdown as a result of the polls, these mixed consequences of the elections are a welcome outcome. ii

Marcus Mietzner (marcus.mietzner@anu.edu.au) lectures in Indonesian and Southeast Asian politics and security at the Australian National University

Inside Indonesia 97: Jul-Sep 2009

Second Presidential Debate Sees Candidates Come to Life - The Jakarta Globe

Presidential candidates Megawati Sukarnoputri, Susilo Bambang Yudhoyono and Jusuf Kalla participate in a televised presidential debate in Jakarta on Thursday night. (Photo: Romeo Gacad, AFP)

June 26 - After a listless first debate more than a week ago, presidential candidates on Thursday gave a much livelier performance during their second nationally televised public debate, with criticism of their rivals finally making its way into the discussion.

The debate, focusing on the eradication of poverty and unemployment, saw the participants more comfortable with the format as they exchanged political barb s.

“Tonight’s debate was much better,” said Andrinof Chaniago, political analyst of the University of Indonesia.

Hendri Saparini, an economics analyst with Econit, a privately owned think tank, said, “The major thing here is that now people can see the differences between the candidates.”

Analysts and observers, however, agreed that Vice President Jusuf Kalla and President Susilo Bambang Yudhoyono dominated the show, while the third candidate, former President Megawati Sukarnoputri, contributed little to the discussion.

Kalla was credited by many for instigating a more robust debate .

“He was the star tonight, making the debate much more lively,” said Effendi Gazali, a communications expert from the University of Indonesia.

Kalla also initiated an attack on policy, commenting on a recent campaign statement by Yudhoyono, who had warned that local entrepreneurs might endanger the country with their vested intere sts.

“I regret that local investors are considered bad, because without their existence, who would create jobs in this republic?” the vice president asked.

Kalla, who is vying for the presidency with Gen. (ret.) Wiranto as his running mate, also took a shot at Yudhoyono’s vice presidential choice, former central bank Governor Boediono, saying that he had allowed bank interest rates to reach high levels and had failed to support the development of a 10,000-megawatt power generation project by initially refusing, as the nation’s top economics official, to issue the necessary guarantees.

Coming to the rescue, Yudhoyono said the decision was later reversed and that the guarantees had been agreed upon.

Prompting laughter and applause from the audience, Kalla teased Yudhoyono for using a popular jingle for an instant noodle product as his campaign tune, saying that it would only lead to an increase in wheat imports.

Yudhoyono parried, saying, “Perhaps the noodle you eat is made from pure wheat, because my noodle is a mixture of wheat, sago and cassava.”

Although observers agreed that no new content was revealed during the debate, the moderator, economist Aviliani, was praised for delivering probing questions.

“As for the substance of the responses, Yudhoyono and Kalla had better answers compared to the previous debate,” Andrinof said. “But there were no innovative answers that we hadn’t already heard.”

“In the question-and-answer section, Megawati seemed not to have progressed at all. She lives in the past and gave no better insights than in the previous debate,” he added.

However, Hendri said that Megawati was consistent in her intentions to reduce state debt and emphasizing the need to revise the Labor Law.

“Megawati and Kalla stressed the importance of revising the Labor Law, but Yudhoyono was against it. It shows that he supports market liberalization. He claimed past government successes but lacks vision on how to reduce poverty and the unemployment problem,” Hendri said.

The three presidential candidates will meet for their third and final debate next Thursday.

Indonesia's High Hopes For The Next SBY Term

Far Eastern Economic Review, Jakarta, James Van Zorge, June 19 - There are few people in Indonesia who doubt that the incumbent president, Susilo Bambang Yudhoyono, widely known as SBY, will win the July 8 presidential election. Mr. Yudhoyono's competitors, who include his predecessor and erstwhile boss, Megawati Sukarnoputri, and his current vice president, Jusuf Kalla, are trailing far behind in popularity polls. Pundits and pollsters alike doubt Ms. Megawati can win more than 20% of the popular vote, and Mr. Kalla would be considered extraordinarily lucky if he could manage 10% of voters' support in his bid for the presidency. Barring some unforeseen disaster on the campaign trail, Mr. Yudhoyono will walk away with a simple majority of the vote and once again become the leader of the world's third-largest democracy.

The president's broad appeal compared to Ms. Megawati and Mr. Kalla is no mystery. The primary reason is economic performance: Under Mr. Yudhoyono's leadership, over the past five years the Indonesian economy has registered strong growth, more than 6% in 2008 and perhaps reaching 4% in 2009, a respectable performance for any economy during today's global financial crisis. Poverty, underemployment and income distribution remain an issue, yet there are signs that poorer Indonesians have seen an improvement in their standard of living and the middle class continues to grow.

The international and domestic business communities also praise Mr. Yudhoyono's administration for its macroeconomic management. In particular, the stewardship of Minister of Finance Sri Mulyani has stood Indonesia in good stead, and the country is well positioned to receive direct and portfolio investment flows when the global economy starts to recover. A few multinationals are already taking the plunge -- Volkswagen of Germany, for example, recently inked a deal to develop a large manufacturing facility in Jakarta to serve the domestic and regional markets.

Another reason why voters find Mr. Yudhoyono an attractive presidential figure is his image as a clean politician, a rare commodity in Indonesia. Unlike his predecessors, he has managed to steer clear of scandals, and his administration has clamped down on corruption throughout the country. Retired ministers, governors, members of the House of Representatives (DPR) and a former central banker have been brought to court on charges of corruption and, in many cases, given stiff prison sentences. As recently as five years ago, public officials viewed their stay in office as an opportunity to steal from the state's coffers with impunity. Now they have to think twice before taking the risk.

Indonesians remember Mr. Yudhoyono's predecessor, Megawati Sukarnoputri, in a dramatically different light. As the daughter of the country's first president, Sukarno, she initially evoked sentiments of nationalist pride and hopes for a return to the imagined glories of her father's era. Using the Sukarno name as her main calling card, most Indonesians did not seem to notice her lack of depth in policy issues. But not soon after rising to office, very quickly Ms. Megawati's supporters realized that she was out of her league.

Aloof and apparently taking very little interest in managing affairs attendant of her office, most of Ms. Megawati's time was spent on ceremony and pomp. Meanwhile, the policy vacuum was filled by her husband, businessman Taufiq Kiemas, along with a gang of crony politicians and their financiers in the corporate world. Not only was there little reform, there was a palpable sense the country was going backward.

Whereas Ms. Megawati suffers from the public's memories of her lackluster performance in office, Vice President and Golkar Party Chairman Kalla fares even worse. Touted as faster and better than Mr. Yudhoyono, Indonesians might concede that their president is not much of a decision-maker, but they are not necessarily convinced Mr. Kalla would make a better head of government.

Most Indonesians would probably agree that Mr. Kalla has shown himself to be a more decisive leader than Mr. Yudhoyono. The president is widely viewed as risk-averse and painfully slow when it comes to making policy pronouncements. As one cabinet minister recently told me, "I have been going to cabinet meetings for almost five years. Not once did the president make a decision during any of those meetings."

Yet Mr. Kalla consistently polls less than a 5% approval rating as a presidential candidate. One possible reason is his background. As a successful businessman during the former Suharto regime, Mr. Kalla is placed in the same class as another Golkar Party leader, Aburizal Bakrie, a billionaire who also happens to serve as Mr. Yudhoyono's coordinating minister of people's welfare. Mr. Yudhoyono might not fit everybody's image of the ideal president who takes charge, but Mr. Kalla is viewed as something worse: a political dinosaur.

Certainly Mr. Kalla and Ms. Megawati have not helped their chances of winning through their choices of running mates. Mr. Kalla picked retired General Wiranto, a former Suharto adjutant commander-in-chief of the Indonesian armed forces. Ms. Megawati joined forces with Prabowo Subianto, another retired general and former in-law of Suharto. Both vice presidential candidates share a tainted past. Mr. Wiranto is thought to be responsible for bloodbaths in East Timor, while Mr. Subianto has admitted to being behind Operation Rose, a special forces operation ordered by Suharto in 1998 that involved abductions, torture and the murder of student activists.

In stark contrast, Mr. Yudhoyono's running mate is Boediono, a professional economist and widely respected technocrat who until recently was head of Indonesia's central bank. Holding a doctorate in business economics from Wharton, the soft-spoken Mr. Boediono is not only recognized as a highly competent public official, but clean as well.

So far, opposition candidates have tried a variety of tactics to attract voters. Mr. Kalla and Ms. Megawati are, for example, trying to woo voters with a nationalist platform, and have charged Mr. Boediono with being a "neoliberal," implying that he is overly inclined to support foreign investment and open markets at the expense of the welfare of poorer Indonesians.

Unfortunately for the opposition, a nationalist platform is unlikely to elicit much excitement or support from lower-income Indonesians, primarily because they have seen their household incomes improve substantially during Mr. Yudhoyono's tenure in office. Calls for retreating to inward-looking policies might be attractive to a minority of voters, but when the economy is doing well it is hardly a winning platform.

Both of the opposition candidates are also claiming that they will be able to grow the economy faster than Mr. Yudhoyono. In a recent business forum, Ms. Megawati said she could grow the economy by 11% -- when she was queried how she would achieve growth rates exceeding China's, her only reply was that she did not yet have any specific policy ideas. Lacking substance, it is unlikely Indonesians will be buying Ms. Megawati's tales of future prosperity.

Mr. Yudhoyono should not assume a victory in July would necessarily result in a more vibrant business climate. Indonesia is definitely better placed now than some of its regional neighbors in attracting investment, especially when one looks at the economic challenges facing Singapore, South Korea and Taiwan, and the political turmoil in Thailand and Malaysia. Still, some questions need to be asked about the direction Mr. Yudhoyono will be taking Indonesia for the next five years.

Investors will be watching for Mr. Yudhoyono's choice of a cabinet. They will also be waiting to see if he will be able to parlay a mandate from the electorate into a pliant DPR -- at least one that is more cooperative than during his first term in office. Finally, the international and domestic business community will be anxious for the president to articulate a more detailed blueprint for economic policy for his new administration, hopefully addressing some of the more pressing issues that previously remained untouched.

Hopefully, Mr. Yudhoyono will not yield to the temptation to stitch together a coalition cabinet. He tried this during his first term in office, as did his predecessors, based on the mistaken belief that bringing politicians from other parties into the cabinet would result in greater support for his policy initiatives inside the DPR. Not only did cabinet positions fail to buy loyalty, it also resulted in cabinets with little redeeming value, more often than not burdening the president with ministers who were more focused on advancing their vested interests, and in more egregious cases used their offices as a source of largesse.

At the very least, Mr. Yudhoyono will need to reserve some of the more critical economics-related and judiciary cabinet postings for seasoned, reputable professionals if he is to instill confidence and win the respect of the business community. Mr. Yudhoyono's choice of Mr. Boediono as his vice president is an early sign that he will probably lean in this direction. Still, it is too early to tell whether or not Mr. Yudhoyono might succumb to political pressure from party bosses and make unnecessary compromises.

Assuming the president does select a cabinet based primarily on merit, that opens up a related question: If a coalition cabinet does not ensure loyalty to the president from coalition members inside the DPR, then what will? Indeed, it has become increasingly difficult for Indonesian presidents since the demise of Suharto and his Golkar party to find ways to work effectively with the DPR. The powers of the DPR have increased substantially, and members are eager to exercise them.

Moreover, the number of new parties has mushroomed since 1998 (32 parties participated in this April's elections, and nine ended up with sufficient votes to seat members inside the DPR). To make matters even more complicated, leadership within parties tends to be fractured. If chairmen find it difficult to lead their own parties, how can a president be expected to deal with nine individual parties at once?

One possible solution is to give the president more help inside the palace. In terms of professional support staff commonly found in mature democracies, the Office of the Presidency currently has scant resources. For example, there is no equivalent of the U.S. White House Office of Congressional Affairs, which is staffed with scores of analysts and skilled operators whose sole purpose is to improve prospects for congressional approval of the president's legislative agenda. There are rumors in palace circles that Mr. Yudhoyono is thinking about creating a legislative liaison office to help him realize his policy agenda.

What then will Mr. Yudhoyono try to achieve during his next five-year term? So far there are few signs of new directions on the policy front. It is probably safe to assume that one of Mr. Yudhoyono's priorities will be continuing efforts to combat corruption. It is also widely assumed that his core economics team will stay in place, and therefore sound monetary and fiscal policies will remain a hallmark of his administration.

The business community hopes for more -- the investment community believes that the president should leverage the country's political stability and economic recent successes, and use his public mandate for pushing ahead with policies that could reposition Indonesia as the destination of choice for business in Southeast Asia. Business leaders put the priority on three areas: expanding and modernizing the country's antiquated infrastructure, overhauling uncompetitive labor laws, and improving the legal and regulatory framework underpinning regional autonomy. Whereas infrastructure is primarily an issue requiring increased government spending and could be easily accommodated because of Indonesia's low budget deficit, the latter two areas would require some political risk-taking from Mr. Yudhoyono.

Indonesia's labor laws, in particular excessively high severance pay, have long been a source of complaints from local and foreign business, causing many labor-intensive manufacturing industries such as textiles and footwear to relocate to China, Vietnam and Bangladesh. Corporations also complain frequently about local governments' cavalier attitude toward business and excessive rent-seeking.

Reforming Indonesia's labor and regional autonomy laws would require the president to challenge labor leaders and heads of local governments. The prototypical Javanese, Mr. Yudhoyono avoids conflict and seeks consensus above all else. Those are precisely the types of character traits that many find troublesome, especially those who hope for more change in the future. Whether or not Indonesia's president is capable of finding the strength to tackle the next stage of reform remains to be seen.

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Mr. Van Zorge is a partner in Van Zorge, Heffernan & Associates, a consulting firm in Jakarta specializing in business intelligence and government relations.

The Candidates for Indonesia’s Future Bear a Strong Resemblance to the Past

Jakarta Globe, James Van Zorge, June 18 - When I think about how to describe the current crop of Indonesian presidential hopefuls, I have a vision of the past. All three contenders are, in their own way, creatures of Indonesia’s past. Just a decade into the reform period, the major political figures in this country all came into prominence during the Suharto era. Among them, I see one as a classic Suharto-esque businessman, another as a woman longing for a return to the glory days of her father and the third as a transitional liberal willing to break with the past but uncertain how to do so decisively.

Golkar standard-bearer and Vice President Jusuf Kalla belongs to a class of businessmen who seem to view politics as a branch of the family business. Under Suharto, there was nothing wrong with growing one’s business while supposedly serving the public. In this rarefied Manichaean world, monopolies can be a good thing and competition from outside the club is treated with contempt. This is a conservative world where the tenets of democracy might be tolerated but it is hardly a place of liberal values and policies.

For businessmen who thrived under the Suharto regime, growing an empire was predicated upon the grace of the president and his family. Rent-seeking, not competition and open markets, was the magical key for building wealth.

It is small wonder that Kalla and his cohorts wax eloquently about the Suharto years. More than once Kalla has voiced his opinion that democracy has gone too far in Indonesia. I worry that if he were to have his way, he would more than likely dismantle anticorruption agencies, place a muzzle on the media and clamp down on civil and human rights activists.

Given his personal history and values, it is no coincidence that Kalla has chosen retired Gen. (ret.) Wiranto as his running mate. At a young age, Wiranto was taken under Suharto’s wing and served faithfully as the president’s adjutant. In the eyes of Suharto and his children, Wiranto would have made a perfect successor, mostly because he could be trusted to protect the family’s interests and keep the clan firmly in power.

If you think I am exaggerating, consider this: By virtue of where they sit, crony businessmen think of democracy as an intrusion, an unnecessary import from the Western world and, given the potential stakes, which is the dissolution of an old order they came to thrive upon, something to be inherently feared. In the words of a famous liberal US Supreme Court justice, Louis Brandeis: “We can have democracy in this country or we can have great wealth concentrated in the hands of the few, but we cannot have both.”

Megawati Sukarnoputri, in contrast to Kalla, is far from being an avaricious industrialist. Neither does she dream of returning Indonesia to its Suharto-run past. But for sure, she is thinking deeply about another past — her father’s.

When I first met Megawati in 1997, I asked her about any plans she might have for a political future and what she might consider as a strategy to reach higher office. Our ensuing conversation, with her eyes swelling in pride whenever I raised the name of Sukarno, was most telling: “Of course I will one day be the president. I often have conversations with my father about that. But as far as a strategy, you Westerners don’t seem to understand. I have no need for a strategy. Instead, I rely upon something else: Factor X.”

True to her word, Megawati did eventually become president. And as far as I could tell, she certainly did not have a strategy. What she did have in mind, however, was following in her father’s footsteps, and if you listened to what she said and even the countries she visited when she was president, it was eerily in lockstep with Sukarno’s own philosophies and travels.

Today, there should be little doubt that what Megawati wants more than anything else is to build a sort of Sukarno dynasty. In that sense, she is similar to another famous woman politician, the late Benazir Bhutto of Pakistan, whose father, former Prime Minister Zulfikar Ali Bhutto, was, just like Sukarno, an avowed nationalist with socialist leanings who was eventually ousted by a military coup.

Unfortunately, there are also some striking dissimilarities between Megawati and Benazir. While Benazir experienced, in her own words, some of the happiest days of her life in the West during her university years and hence was decidedly pro-Western in her views, Megawati leans toward the opposite side of the aisle. One can only surmise that perhaps her dislike for the West is linked somehow to her knowledge that the United States was no friend of her father.

What, then, given her background, can the electorate expect of Megawati? There is much we know already from her previous stay in office, and many people would conclude from that experience alone that she would not prove much of a leader. Megawati claims, however, that she has learned from her past mistakes. She has also chosen a dynamic running mate, Prabowo Subianto, also a Suharto-era general, who presumably would compensate for her well-known weaknesses.

Still, one must wonder. Megawati’s life experience can’t be erased. Aloof, an avowed nationalist with a strong aversion toward the West, seemingly uninterested in and incapable of grasping the policy issues that are required of a president, and primarily driven by a dynastic impulse for power, there is little reason to believe that Megawati would be a better president if given another chance.

Finally, there is the incumbent, Susilo Bambang Yudhoyono. How to describe him? I might choose a well-known political figure from the past with similarities to Yudhoyono: former US President Jimmy Carter. Much like Carter, who was also a military man, Yudhoyono’s politics are liberal. Both men are innately reserved and studious. Both are highly educated and considered to be intellectuals.

But the similarities go much deeper. Like Yudhoyono, Carter was criticized while in office for paying too much attention to details. He was also viewed as being indecisive, something which both the Jakarta elite and the electorate recognize as one of Yudhoyono’s most glaring deficiencies. Finally, Yudhoyono shares with Carter an inability to roll up his sleeves and develop the types of political relationships outside the palace grounds that would serve him well in building support for his policies.

If re-elected, many Indonesians are hopeful that, somehow, Yudhoyono will become more assertive and leave more of an imprint and legacy behind him.

Personally, I find it difficult to believe he will change very much in his ways. Adjusting policies is one thing, and there are many examples of presidents who have had second thoughts about their previous stances and took on new courses. But the weaknesses that are so apparent in Yudhoyono are not related to policy. Rather, like Carter, it is a question of character and temperament. Should we expect a mature man entering his sixth decade in life to suddenly and radically change his behavior? Of course not. As the old saying goes, what you see is what you get.



James Van Zorge is a partner in Van Zorge, Heffernan & Associates, a business strategy and government relations consulting firm based in Jakarta. He can be reached at vanheff@gmail.com.

Indonesia's Corruption Court in Fight for Existence

Reuters, Jakarta, Olivia Rondonuwu, June 17 - It has put central bankers and government officials behind bars and is easily Indonesia's most feared judicial body. But the corruption court, an important weapon in the fight against graft, is now under threat itself.

Politicians, some of whom have much to fear from the court, are meddling with the panel of judges and even trying to close it down completely.

That could threaten one of the more successful anti-graft campaigns in a Southeast Asian nation that year after year ranks among the world's most corrupt.

Widespread graft deters investors who otherwise might pour billions of dollars into developing Indonesia's abundant oil, gas, and mineral deposits or improving its shoddy infrastructure. That is one reason Indonesian economic growth tends to languish behind economic behemoths like China and India.

"The battle against corruption is still a long way from over, but at least the public can see it has gone in the right direction," said Emerson Yuntho of Indonesia Corruption Watch.

Set up in 2004, the court -- housed in a shabby building in central Jakarta with broken glass windows and damp, smelly courtrooms -- has a number of features that have made it far more effective in punishing the corrupt than Indonesia's regular court system has been.

One is its system of appointing three ad hoc, or outside, judges out of a total of five on the panel. These ad hoc judges are picked from outside the court system and include academics and other professionals.

In a country where the judiciary itself is rated among the most corrupt institutions, these outsiders are considered more independent.

Armed with dossiers of evidence from the Corruption Eradication Commission, or KPK, the corruption court has had a 100 percent conviction rate. The average sentence, for the 90 or so defendants who have been tried. is about four years, according to Indonesia Corruption Watch (ICW).

By contrast, the normal courts treat corruption cases much more leniently. Last year, 62 percent of those charged with corruption were let off by the public courts, up from 57 percent in 2007 and 31.4 percent in 2006. Sentences are generally lighter, with an average of just under six months, ICW said.

"We need the (corruption) court, because the public court is ineffective," said Budi Effendi, an unemployed man in Jakarta.

"But maybe we should follow China's example, recover the stolen money and sentence the corrupt to death to serve as a deterrent."

NO LONGER UNTOUCHABLE ?

Scores of senior officials, who under previous governments would have been considered virtually untouchable, have been sentenced by the corruption court including a former governor of Aceh province, Abdullah Puteh, and a leading prosecutor, Urip Tri Gunawan, who took bribes to drop a graft case involving a tycoon.

Several senior central bankers including a former governor, Burhanuddin Abdullah, were found guilty of making illegal payments from a foundation to several members of parliament in order to influence amendments to legislation.

And on Wednesday, the corruption court sentenced one of President Susilo Bambang Yudhoyono's in-laws, former central bank official Aulia Pohan, to four-and-a-half years in prison for his role in approving illegal payments to members of parliament.

Eight members of parliament have been sentenced by the corruption court, and others still await verdicts. That, many suspect, is why parliament has delayed passing the key legislation required to ensure the court continues to exist.

However, a member of parliament in charge of discussing the bill denied any deliberate move to thwart the court.

"There is absolutely no attempt from the parliament to slow down or to intentionally not finish (the legislation)," Dewi Asmara, the head of a special committee discussing the bill, told Reuters.

She said issues holding up the bill include whether to keep the current ratio of three ad hoc judges to two career judges, or whether to reverse the numbers which, many believe, would make the panel less independent.

President Yudhoyono, often known by his initials SBY, was elected in 2004 on promises to fight graft and is seeking re-election on July 8 in a campaign where his track record in tackling corruption is under scrutiny.

The Wednesday decision against his in-law could help Yudhoyono's campaign by showing a commitment to fight such crimes regardless of who is involved.

"Of course Aulia Pohan's detention, followed by a charge and a sentence, will increase SBY's reputation in fighting graft and law enforcement," said Arbi Sanit, an academic at the University of Indonesia.

Yudhoyono has said he would issue a presidential decree to ensure the court's continued existence if parliament fails to pass the legislation before October.

Without that, the prime anti-corruption agency, or KPK, would be powerless when it comes to prosecuting suspects, and the public courts would once again take over such cases.

"I suspect, like others, that this bill will not be approved by its deadline of December 19. Why? Because how could parliament do that? It's like digging their own grave," said Teguh Hariyanto, a judge at the corruption court.

"If SBY whose selling point is corruption eradication got elected again, he should at least have the guts to do something if this corruption court law is not approved," he added.

(Editing by Sara Webb and Jerry Norton)

Indonesia Hands Down Convictions in Graft Case

Wall Street Journal, Tom Wright, June 18 -- A relative of President Susilo Bambang Yudhonoyo was among four former central-bank officials convicted of corruption and sentenced to prison on Wednesday, in a further sign that Indonesia is taking action against graft.

Mr. Yudhoyono promised to clean up government since becoming the nation's first democratically elected president in 2004.

The trial of Aulia Pohan -- a former Bank Indonesia deputy governor whose daughter is married to Mr. Yudhoyono's son -- for his role in the misuse of 100 billion rupiah ($10 million) in central-bank funds drew scrutiny from antigraft campaigners and the media because of the defendant's ties to the ruling elite.

Mr. Pohan and three other defendants tried with him were convicted for their roles in channeling central-bank funds to lawmakers in a bid to influence banking legislation.

Indonesia's anticorruption court, a special institution set up to try graft cases outside the country's legal framework, sentenced Mr. Pohan to 4½ years in prison and ordered him to pay 200 million rupiah in fines. The other defendants all received the same fine, as well as prison sentences of four years or 4½ years.

Mr. Pohan's lawyer said his client will appeal the ruling. The other three defendants said they will appeal the verdicts, according to Reuters.

In October, the court sentenced former central-bank governor Burhanuddin Abdullah to five years in prison for his role in the corruption scandal. In February, Indonesia's high court rejected Mr. Abdullah's appeal and extended his sentence by six months.

Mr. Yudhoyono is seeking re-election in a July 8 national vote and is the front-runner, in large part due to the popularity of his antigraft campaign, which has resulted in convictions and prison terms for lawmakers, regional governors and central-bank officials.

The president will go after higher-profile suspects if he wins re-election, said Dino Djalal, a spokesman for Mr. Yudhoyono.

Efforts to weed out graft, which remains endemic in many Indonesian institutions including the parliament, police and judiciary, according to watchdog Transparency International, face roadblocks from vested interests.

The anticorruption court, set up in 2004, has a record of convictions. Its mandate expires in December and the parliament, some of whose members face continuing corruption probes, has yet to pass legislation needed to ensure its continued existence.

Indonesian Presidential and Vice Presidential Candidates

The three campaigns now have their own websites. Timothy Simamora kindly provided the URLs to me via Facebook. Here they are. I've appended the Alexa traffic ranking for today in each case. The rankings add another set of numbers to public opinion polls in Indonesia. Lower numbers mean more traffic. Like most of those polls, it looks like a walkover for SBY-Boediono. Their site gets a surprising high level of traffic for an Indonesian political site.


Susilo Bambang Yudhoyono-Boediono
http://sbypresidenku.com/
Alexa ranking - 59,778

Megawati Soekarnoputri-Prabowo Subianto
http://megaprabowo.com/
Alexa ranking - 1,563,135

Jusuf Kalla-Wiranto
http://jk-wiranto-2009.com/
Alexa ranking - 3,364,705

Looks like money, and even long-established branch networks, don't conquer all. But iit remains a politics of personality system.