The Jakarta Post
President Joko “Jokowi” Widodo’s apparent reelection fulfills almost all the basic needs of investors and businesspeople in general: political and macroeconomic stability, legal certainty and policy consistency. The official vote tally will be concluded in a month, but quick counts, which show Jokowi leading the tallies, have proved to be accurate samples in previous elections.
The peaceful conclusion of what is seen as the world’s most complex and largest single-day election, also serves as a strong endorsement of Jokowi’s economic management, which over the five years has focused on the development of physical infrastructure and soft infrastructure (institutions), thereby creating a virtuous cycle within the economy. The investment pace will soon be reinvigorated.
Massive physical infrastructure development has improved connectivity between dispersed islands and between rural and urban areas within the major islands, thereby improving domestic market integration and reducing logistics costs. This in turn strengthens economic competitiveness, making the country much more attractive to investors.
Jokowi’s soft infrastructure development through various reforms for institutional capacity building, notably to develop a clean, efficient and competent system of governance and business licensing as well as a better-targeted vocational training system, has further improved the overall business climate. Indonesia’s ranking in the World Bank’s index of the ease of doing business has greatly improved, though more improvement is necessary to put the country on par with its peers in the ASEAN region.
Yet more encouraging is the fact that Jokowi’s anticipated second term (October 2019 to 2024) holds great promise for Indonesia. Since Jokowi will no longer have to face the five-year political cycle, he will have more political courage to launch bolder, though painful, reforms, which are crucial to sustained development — such as slashing hugely wasteful spending on fuel subsidies, boosting renewable energy development and reducing wide inequality in income distribution and asset ownership.
Jokowi will have a bigger chance of gaining political approval for his bolder structural reforms since, according to the quick counts, his coalition parties also will hold the majority of seats in the House of Representatives.
A more confident Jokowi, who has thus far maintained his impeccable integrity, will be more assertive and dare to stand up against pressure from political parties, businesses and trade lobbies in introducing bold reforms that promise long-term benefits but inflict short-term costs.
Therefore, Jokowi should establish a more professional Cabinet, notably the ministers in charge of economic policy. He has thus far been greatly assisted by very competent fiscal and monetary management teams that have maintained macroeconomic stability amid international market turbulence and global uncertainty.
But Jokowi needs more technocrats in such areas as trade, industry, agriculture, mining and transportation. Some areas of economic policy are quite technical, and their ramifications are so complex that related decisions are better left to professionals than to politicians and pressure groups.