Rabu, 17 Oktober 2007

A Reformed Indonesia

by Douglas E. Ramage

This article was originally published in The Australian Financial Review on October 12, 2007.


That the Indonesian national police are very good at catching terrorists is no longer a revelation. Since the first Bali bombing Indonesia's police have racked up one of the world's best records for successfully investigating acts of terrorism. In most cases good police work has been followed by effective prosecutions and convictions. Despite the sentence reductions for several of the Bali bomb accomplices, on September 10 Indonesia's Supreme Court upheld the death penalty conviction of the three key Bali bombers, Amrozi, Imam Samudra, and Ali Ghufron. (Admittedly the attorney-general has taken a different view on the death penalty in the last week.) What is less well-known is that Indonesia's police are undertaking far-reaching reforms to improve policing, reduce crime, and to civilianize their operations in a democratic Indonesia.

Formally separated from the armed forces just four years ago, the police have begun to demilitarize training and end the systemic brutalizing of cadets in the police academy (which was part of the Soeharto-era curriculum intended to make the police ''tough''). The changes are dramatic in the National Police Academy, or Akpol, in Semarang, Central Java. Akpol is well known among Australian officials because ofAustralian assistance given to establish its special counter-terrorism school. Just across the parade ground, on the same campus, a remarkable effort to remake the Indonesian police is under way; all 900 cadets now receive human rights and community oriented training.

Akpol's commanders did not merely replace the old militarized curriculum with dry text books on international human rights standards. Instead, cadets are taught by young human rights trainers from Jogjakarta's Islamic University of Indonesia. In just a few years, the Indonesian National Police efforts to implement new approaches to ''community oriented policing'' are starting to reduce crime and improve the image of the police. In two precincts in Jogjakarta alone crime rates plunged 25 per cent after the police began listening to the communities they serve, and responding to their complaints.

While young Akpol cadets were studying human rights and community policing in Semarang last July, in Jakarta the notorious Customs Office at the country's largest port, Tanjung Priok, was being cleaned up. Finance Minister Sri Mulyani Indrawati, with backing from President Susilo Bambang Yudhoyono (SBY), is overhauling the Customs Office; over 1300 Customs Office civil servantsin the inefficient and highly corrupt port were transferred. Just 800 new ones took their place. Subsequent civil service reforms included a doubling of salaries and the introduction of merit-based performance measurements. In the first month of reforms, the much smaller customs force at the Tanjung Priok port increased inspection and X-raying of containers from 500 a month to over 2500. In one fell swoop this civil service reform tackled endemic corruption, stimulated exports, and burnished the reform credentials of the government.

The thread running between human rights education at Akpol and a hard hitting clean-up of the infamously corrupt customs service is that they both represent genuine reform. These efforts by Indonesia's democratic government to improve services - in policing and customs - show Indonesians that the post-Soeharto era can indeed deliver the goods: free elections and concrete improvements in services to citizens. And these civil service reform efforts build on other reform initiatives in the judiciary, the attorney-general's office, and the tax department.

But are these examples of reform simply a couple of isolated, though happy, stories? Or is there a momentum for reform in Indonesia, supported and led by Yudhoyono's government?

Five years ago, Indonesia was a country of equal opportunity impunity, with democracy and free elections (at that stage) having seemingly brought little but chaos, poor governance, and scant justice - much less better services - for ordinary citizens. Is Indonesia today finally accelerating a reform and democratization trajectory begun with the fall of Soeharto in 1998, followed by free national elections in 1999? And can SBY, who won nearly 62 per cent of the vote as Indonesia's first directly elected president in 2004, really make Indonesia work as an electoral democracy that also improves living standards and delivers better services? The evidence indicates Indonesia is indeed moving along a steady reform path, gaining momentum in critical reform areas suggesting that Yudhoyono may be in a good position to win re-election in June 2009.

The conventional wisdom on Indonesia has shifted over the past three years. Worries that it was a messy, balkanizing country racked by violent extremism have ebbed as a stable, consolidated democracy achieving relatively high levels of economic growth emerges. This view of Indonesia has now started to take hold in some international media, and among analysts and policymakers in Canberra, Washington, London and elsewhere.

Writing recently in the Washington Post consultant Jim Castle and pollster Craig Charney even asked whether we are now seeing the emergence of a ''democratic Indonesian tiger''. That beguiling combination of political democracy and rapid economic growth appears to be within Indonesia's grasp.

The new and positive consensus view of Indonesia is far more accurate than the panicked assessments of a few years ago. The Indonesian economy in 2007 is strengthening and opinion polls show Indonesians themselves think the country is in fairly good shape; a far cry from its state in the aftermath of the Asian financial crisis and the messy first years of democratic rule under Abdurrahman Wahid.

Indonesia should now be seen as a normal large developing country, stable, with generally competent national leadership, facing a similar, though normal, range of challenges in common with other large, developing democratic countries such as India, Brazil, and Mexico.

Indonesia is enjoying its sixth straight year of economic expansion with growth in 2007 slated to reach 6.3 per cent, slightly above the average for the Association of South East Asian Nations six - Malaysia, Thailand, Philippines, Vietnam, Singapore and Indonesia. According to the International Monetary Fund, Indonesia's real GDP growth, real export growth, investment growth, and private consumption growth all beat the average for the large ASEAN economies. The macro-economy is sensibly managed by a highly competent economic team. With growth predicted to reach 6.8 per cent in 2008, even 7 per cent GDP growth rate is no longer unimaginable and such levels by 2009 would significantly strengthen Yudhoyono's re-election chances.

Government budget expenditures on education, health, and infrastructure grew modestly in 2007, and SBY's proposed 2008 budget includes double digit year-on-year percentage increases for public works, education, health, and transport. One of the smallest increases in the national budget is for the armed forces. Indonesia's spending priorities increasingly reflect the country's true needs.

Yet strong macro-economic and budget fundamentals mask other stubborn problems. The most important problem of all is poverty - Yudhoyono promised that his election to office, and democracy itself, would improve lives by reducing poverty and creating more jobs. Although in 2007 there was a slight reduction in the national poverty rate over previous years, the numbers are daunting: 16.6 per cent (just over 37 million people) live at or below the official poverty line (about $US1 a day).

Yet if the poverty rate of those ''near'' absolute poverty is set at about $US2 a day then 45 per cent, or over 100 million Indonesians, are poor.

Owing, in part, to poor labor policy, Indonesia's strong growth is not creating as many jobs as it could. The country's labor laws discourage companies from adding employees and rationalizing their workforces. Moreover, the economy's growth has not been in labor intensive industries like textiles and electronics. In other Asian countries growth at these rates would produce more jobs and drive down poverty more rapidly. Unfortunately this is not yet happening in Indonesia which, for the time being, is a growth without jobs economy.

Although the government adopted sensible investment and tax policies in 2007 that do improve the attractiveness of Indonesia to foreign investors, the overall investment climate is still rather poor. And a looming electricity shortage - the result of few infrastructure investments in the past decade - will further dampen foreign direct investment flows and tamp down continuing economic growth.

Indonesia's place today is the result of choices made by its people - voters and leaders alike. Since the fall of Soeharto, the country has prioritized democratization, macroeconomic stability and growth rather than improved governance, better services, and micro-economic reform. And given the heavy national emphasis on consolidating a democratic electoral system, ie: getting elections right, it bears a closer look at just what all the millions of voters and hundreds of elections tell us about the new Indonesia.

Elections are now a permanent fixture of Indonesia, at both the national and local level, exemplified most by hundreds of city, district and provincial polls held in the last two years, embedding both choice and stirrings of genuine accountability, at the city and district level for the first time.

Before 2005 all mayors, governors, and district heads were either hand-picked by the Soeharto regime or selected through an indirect so called election by local legislatures. Only since 2005 have Indonesians been able to directly choose their local leaders. Indeed,

Indonesians now vote in more free and fair elections, and more often, than citizens of nearly any other democracy, including over 320 provincial, district and city elections since 2005. It's been a case of ''all elections, all the time'' for Indonesia in the past two years as district heads, mayors and governors submit to direct electoral contests.

Local officials are being held accountable to voters for the first time. And with over 40 per cent of all incumbent local executives (mayors, district heads, and governors), including many of the most corrupt local politicians, having lost their bids for re-election

since 2005, Indonesia now has one of the democratic world's most competitive electoral systems.

The commitment of Indonesians to participation in elections can be seen in very high voter turnout, running between 60 per cent and 70 percent - giving Indonesia one of the highest voter participation rates in the world (for countries that do not have mandatory voting).

Elections in Indonesia are exceptionally peaceful and well administered by local election authorities. Electoral disputes are settled in established court procedures in which the judiciary's decisions are accepted by the complainant parties and candidates. When the electoral violence in the Philippines or the irregularities in Thai elections are considered by comparison, Indonesia's elections look even more startlingly peaceful and successful. In part due to these apparently free and fair elections the annual Freedom House global survey identifies Indonesia as the only fully free and democratic nation in South-East Asia.

One critical factor in the success of the electoral process in Indonesia is the vigorous civil society monitoring of voting - the sole nation-wide organization being the Peoples' Voter Education Network, which also has the distinction of being the world's only national election monitoring and voter education group comprising of mass-based Muslim organizations, together with Christian and interfaith groups.

Recent elections also reveal that religion plays little role. Contrary to some popular perceptions of Indonesia as a politically Islamizing country, close examination of hundreds of local and regional polls shows us that Islamist parties are not doing well - less than 5 per cent of contests are won outright by Islamist party candidates and no party or candidate has been successful by running on an Islamic law platform. In fact, Indonesian elections have become largely free of sharply competing ideologies of any ilk. Party ideology does not seem to matter at all - for example, nearly 40 per cent of winning party coalitions were between Islamist and secular-nationalist parties.

There is a major caveat to these otherwise very democratic and successful outcomes - the near-total absence of women running in, much less winning, local elections. Women as candidates for district heads comprised only 3 per cent of all winners in local elections. There were women candidates in only 27 per cent of districts holding elections. One third of Indonesia's directly elected legislatures have no women members at all. A reinvigorated women's movement and advocacy effort is seeking to change this by both putting forward more compelling women candidates and urging parliament to legislate for more opportunities for women.

Local elections in Indonesia are now part and parcel of the other hugely influential post-Soeharto democratic reform - the nation's radical devolution of most government authorities and responsibilities. Since 2001 responsibility for health, education, local infrastructure, and local economic and investment policy has switched to over 450 provincial, district and city governments. So not only are there direct local elections, but local governments have real responsibility and authority for most aspects of governance in communities.

In the Soeharto era Jakarta-based bureaucrats would, for example, determine whether the

budget priority of a district in Bali should be a road or a clinic, and even where it would be built. Now, all such decisions are deliberated and made locally. But, it's important to note two aspects of this far-reaching change in how the country is governed.

First, as Indonesia democratized, reformed its economy and recovered from the Asian financial crisis, it undertook the most ambitious decentralization program of any country since World War Two - surpassing the scope of decentralization in the Philippines 15 years ago.

Second, many analysts and Jakarta's intellectual elite predicted that citizens would soon pine for the allegedly more efficient and predictable Soeharto era. That this has not occurred tells us volumes bout the new Indonesia.

A survey by Lembaga Survei Indonesia (or LSI, Indonesia's leading international standard polling firm) in April this year was revealing - citizens were asked to compare their lives under centralized, authoritarian government of the Soeharto era with the quality of life today, an era of local autonomy and little Jakarta interference.

Nearly three quarters of respondents strongly supported regional autonomy (as decentralization is referred to in Indonesia), despite also saying that poverty and unemployment have worsened in a decentralized and democratic Indonesia.

Barely a quarter of Indonesians believed that unemployment and poverty have improved under democracy and directly elected local governments.

However, according to the LSI survey citizens carefully distinguish between different social ''goods'' in the new Indonesia. They overwhelmingly perceive that education and health services have markedly improved in recent years, with nearly 90 per cent of citizens reporting that education and health services have either improved (nearly 60 per cent) or remained the same (30 per cent).

In some ways this is a perplexing finding - Indonesia remains near the bottom of health and education rankings for ASEAN. And yet the general satisfaction of citizens points to a very high premium on the ability to control their lives locally - this, more than anything else, is the greatest success of a decentralized, democratic Indonesia: vesting power in the hands of local communities and the linking of government accountability to performance through direct local elections.

One now wonders how Indonesia could ever have been governed effectively from Jakarta. There is virtually no affection or longing for a return to a centralized Indonesia. Indonesians enjoy and want to keep their decentralized, highly localized new democracy - even though voters believe poverty and unemployment have worsened.

Regional autonomy has also changed where the money comes from and who uses it in Indonesia today. If we follow the money, we can see a startling shift. According to Bank Indonesia, in 1997 nearly 70 per cent of all bank credits in the country were held in Jakarta banks, whereas in 2007, only 36 per cent of bank credits are in Jakarta. The balance is held in provincial cities and towns. And in 1997 nearly 70 per cent of bank deposits were held in Jakarta, whereas in 2007 the Jakarta share of cash deposits dropped to just below 50 per cent.

Money has followed decentralization as local governments gain authority over their budgets, and as local contractors supply local government needs.

A glimpse of Indonesia's future can be found in the towns of Central Java, places that have directly elected their mayors or district heads. What is striking is how irrelevant Jakarta has become - local officials and civil society leaders seldom mention the capital. It was only a few years ago that all problems, or progress even, were blamed on or attributed to Jakarta. Virtually all discussions about development, poverty, jobs, health care, or infrastructure, in towns and districts are now about local issues, local problems, and local solutions. The highly centralized, Jakarta-centric days of Indonesia are past.

For now only a small fraction of Indonesia's 450 odd local governments are well governed, with elected officials being held accountable by voters for better schools, clinics, roads and so on. But for those 50 to 60 districts that are getting it right, a key reason is the presence of a vigorous civil society - that mix of professional associations, religious organizations, and business groups that help government govern better and hold them accountable.

Most interesting is the proactive role that Indonesia's large Muslim organizations are playing in monitoring local government performance and in providing technical support and local credibility to government reform initiatives.

In Pekalongan and Jepara, in Central Java, for example, Muslim organizations, working with budget reform groups, are helping local officials to better allocate their development budgets and identify and reduce wastage and corruption. And in Semarang, Salatiga, and Jogjakarta in Java and Palu in South Sulawesi we find growing public oversight of local government performance.

So, on the one hand two years of direct local elections are giving Indonesians more control over their lives and communities are instilling a sense of accountability among directly elected officials. On the other hand, most of the 450-plus local governments are very poorly governed, with only the barest minimum of accountability and only the most modest of improvement in services.

The relative success of regional autonomy and local elections could not have been achieved without peace and security in Indonesia. There are two measures of this -

one generally prioritized by Australia, the United States and Indonesia's ASEAN neighbors is focused on terrorism. All generally agree that security has significantly

improved, highlighted most recently by the June 2007 captures of two of the most wanted Jemaah Islamiah leaders in South-East Asia - Abu Dujana and Zarkasih.

Even more significant for Indonesia's democratic consolidation is how its own citizens view their personal and community security - an area of immense concern in the first few chaotic years after Soeharto's fall.

From 1998 to 2002 fears for personal safety and community security always topped the lists of citizen worries in virtually all national polls. In 2007 Indonesians report feeling generally safe and rarely cite security as a top worry. The most recent LSI national survey (in July) shows a remarkable 81 per cent of Indonesians believe that security is now good or satisfactory. And when asked specifically about perceptions of the police in an annual Kompas newspaper poll, positive impressions have been inching upwards for the past several years.

What of Indonesia's armed forces, so dominant in the Soeharto decades? It's striking that in Indonesia today there is nearly a complete absence of national discussion (or concern, even) about the armed forces playing inappropriate roles. That the military is out of politics is one of the most important reforms of all in Indonesia, though barely noticed or

commented upon by most observers. The military's opinion on virtually anything other than defense issues is seemingly irrelevant in the new Indonesia, a startling change from

even just a few years ago.

Important issues relating to the military remain unresolved, including human rights violations in earlier years, the military's off-line budgeting, military-owned businesses, and the reorientation of Indonesia's armed forces towards conventional threats.

The armed forces' swift and quiet exit from prominence in national politics is one of the stand-out transformations in Indonesia. It is in this context that the recent Indonesian purchase of Russian submarines and aircraft must be understood. It is untenable to encourage the Indonesian military to abandon its previously undemocratic internal political role, and to expect the armed forces to become a normal, modern, conventional force while at the same time fretting about the military's exceptionally modest modernization effort. There is a deal that must be struck here: help or allow the

Indonesian armed forces to modernize and professionalize in recognition for their wholesale abandonment of a domestic political role.

With significant reforms in elections, economy, security and now the glimmerings of civil service reform in customs, the tax office and the judiciary - what could derail Indonesia's reform trajectory? Will government legitimacy, valid local elections, growing local accountabilities, (slowly) improving investment climate, and competent national leadership translate into reduced poverty and jobs, before any backlash against democracy takes hold? The key to this is Yudhoyono and actions that he may take in the run-up to the June 2009 presidential elections.

In his own quiet fashion, SBY dominates Indonesia's political landscape unlike any leader since the fall of Soeharto. By virtue of the direct, popular presidential election he is the only president in Indonesia's 62 years to have a genuine popular mandate. Many of the country's democracy elite and political opposition snipe at the president for not using this mandate effectively, for being too cautious and for not aggressively enough leading reform. But SBY retains reasonably high public approval ratings and is the leading candidate for the 2009 elections. Three years into SBY's first five year term a clear majority of Indonesians consistently report they approve of his performance (as high as 67 to 70 per cent earlier this year and now a respectable nearly 56 per cent, according to LSI). And with a year-and-a-half to go before the next national polls, there are as yet no new and compelling alternative candidates.

Former president Megawati Soekarnoputri is the only nationally prominent contender for the presidency, although preference polling shows SBY comfortably ahead of his former rival, especially outside Java.

Former Jakarta governor Sutiyoso has also announced a run for the presidency, although he is little known to most Indonesians and lacks a strong popular base of personal or party support, unlike either Yudhoyono or former president Megawati.

In his first two years in office Yudhoyono's government followed a post-1998 national consensus that prioritized political and democratic consolidation, national unity, and macro-economic stability, instead of the economic and good governance reforms necessary to reduce poverty. Yet following the increase in poverty in 2006, the government is now much more explicitly focusing its energies on poverty reduction and improvement of services.

Getting rid of the most unsavory ministers in the cabinet reshuffle in April this year may have helped to refocus and improve momentum on poverty and services. The appointment of a strong reformist Attorney-General, Hendarman Supandji, probably strengthens the counter-corruption fight, lending credibility to SBY's popular counter-corruption campaign.

The appointment of respected Sofyan Djalil as Minister for State Enterprises buttresses the already strong overall economic team. And replacing Yusril Mahendra with Hatta Radjasa as State Secretary strengthened overall management of the president's office.

Although widely anticipated, but subsequently little commented on, SBY's so-called ''mini-cabinet reshuffle'' has had the effect of better positioning SBY to modestly accelerate reforms, hence putting him in an even stronger position for re-election.

The real challenge for SBY is to prove to voters that he is delivering better services and creating more jobs. If he's successful in this regard he will have not only strengthened Indonesia's democracy by delivering the goods, but he will probably ensure himself a second term in office.

If improvements do not come soon - before Yudhoyono stands for re-election in 2009 - will Indonesians start asking if there are limits to what the country's enthusiastic embrace of democracy can bring them in improved living standards? It's doubtful citizens will become disillusioned with democracy at least for the next 10 years or so. Why? Because - as public opinion polls show - Indonesian voters generally think the country is going in the right direction and SBY more or less gets credit for this.

Not to be ignored is the near-universal perception of SBY by Indonesians as a decent man of high personal integrity. Underestimating how important these personal qualities are to Indonesian voters could lead observers to misread Indonesian politics and leadership issues in coming months.

Finally, because the public's expectations for improved services and jobs remain very modest, it might not be much of a stretch for Yudhoyono to meet those modest expectations.

Douglas E. Ramage is The Asia Foundation's country representative in Indonesia.