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Indonesia: No more Mr nice guy

Joko "Jokowi" Widodo.
Oscar Siagian | Getty Images
Joko "Jokowi" Widodo.

Known domestically as a reformer with a winning smile and a common touch, it is ironic that internationally Joko Widodo is gaining a reputation as Indonesia's executioner-in-chief. The new president, elected on a tide of hope last July, has refused to blink in the face of pressure to stop a spate of executions of convicted drug smugglers, most of them foreign.

Just past midnight on Wednesday, eight prisoners, from Australia, Brazil and Nigeria, along with one from Indonesia, were taken to a field on the island of Nusa Kambangan off the southern coast of Java and shot by firing squad. Recalling his ambassador to Jakarta, Tony Abbott, Australia's prime minister, called the executions "cruel and unnecessary". Although the two Australian prisoners had admitted being part of a group caught smuggling 18.5 pounds of heroin out of Bali in 2005, advocates asking for clemency said they had shown remorse.

Mr. Widodo, 53, has been resolute, saying foreigners should not interfere in Indonesia's judicial system. "Indonesia is in a drug emergency," he said recently, using figures, questioned by some analysts, suggesting there are more than 4m drug users among the country's 250 million population. "We are not going to compromise for drug dealers," he said. Last week's executions were not the first of his presidency. In January, five foreign drug convicts and one Indonesian were shot. Dozens more sit on death row.

The president's grim resolve has played well in the majority-Muslim country, where there is little sympathy for drug smugglers and even less for foreign governments perceived as seeking special favours. For Mr. Widodo, though, his sudden conversion to the merits of the death penalty — a topic he barely raised during the election — smacks as much of desperation as strength.

"He is trying to look like a strong leader and believes this will appeal to his base," says Jonathan Pincus, president of the Rajawali Foundation, a think-tank. Indonesia's president, he says, might be trying to "undo a little of the damage" he suffered after a recent high-profile tussle over an appointment that, to many Indonesians, has sullied Mr. Widodo's reformist credentials.

Proof of progress?

His tough stance is a long way from the homespun charm that endeared him to many Indonesians and propelled him, against all odds, to the presidency. That has put Mr. Widodo, a former furniture salesman and small-town mayor, in charge of the world's fourth most populous nation with an economy roughly the same size as Britain's.

When he came to office — the first leader since independence from outside the political and military elite — there was enormous hope he could stamp out corruption, knock the bureaucracy into shape and drive through economic change. To many ordinary Indonesians, Mr. Widodo was "one of them" and his rise to power proof of how much the country had progressed since its transition from dictatorship in the late 1990s. Yet even some of his strongest advocates concede that he is struggling.

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Rather than a crafty politician able to outwit his foes, his detractors see him as a country bumpkin being manipulated by the elite, says Paul Rowland, a consultant in Jakarta. "You've got the Clampetts in charge of the palace," is how he puts such disdain, referring to the Beverley Hillbillies, a US television comedy.

In an interview with the Financial Times , just before the executions, Mr. Widodo firmly denied he was being outmanoeuvred, though he was reluctant to talk about alleged setbacks. "This is the Financial Times, not the Political Times," he parried. His smile temporarily extinguished, he ventured: "In politics, sometimes we must compromise."

His political troubles began in January when he nominated Budi Gunawan, a three-star general, to lead the police force. That was widely seen as a sop to Megawati Sukarnoputri, a former president and leader of the Indonesian Democratic Party-Struggle (PDI-P), of which Mr. Widodo is a member. Mr. Gunawan was regarded by many as an old-style political appointment, not the sort of clean technocrat Mr. Widodo had promised. That impression only intensified when the Corruption Eradication Commission named Mr. Gunawan as a suspect in an investigation. He vigorously denied the allegations and his suspect status was overturned by another court before he was made deputy police chief.

As a turf war erupted between the police force and the thinly staffed anti-graft commission, some of Mr. Widodo's supporters were shocked as he stood on the sidelines.

Sukarnoputri's attack

That has not been the only blemish. Many of Mr. Widodo's cabinet appointments bear the imprint of Mrs. Sukarnoputri, the daughter of Sukarno, Indonesia's first president. Mrs. Sukarnoputri's own daughter was appointed a senior minister, one of several cabinet selections that reflect her influence. To make things worse, in April Mrs. Sukarnoputri launched an attack on Mr. Widodo. Though she did not name him, she said the constitution obliged presidents to do the bidding of their party and warned against "traitors who have repeatedly stabbed her in the back".

Such setbacks appear to be damaging his popularity. One poll in February showed his support at 42 per cent against 72 per cent in August. Political ructions could also limit the investment that Mr. Widodo is keen to encourage. "Businesses need to know that politics will be stable if they are to invest," says Rusdi Kirana, owner of Lion Air, Indonesia's biggest airline and a member of the president's business advisory group.

Eri Suriamuldana, a 45-year-old who runs a welding business in Jakarta, is also dissatisfied. The president has yet to make good on his election pledges such as a plan to extend credit to small entrepreneurs, he says. "He's not brave enough . . . I'm not very optimistic about the future if he's still running the government under the shadow of his political party."

In the interview, Mr. Widodo sought to assure that he was craftier than he appeared. He points to the swift passage of his first budget, which diverted more than $20 billion from fuel subsidies to infrastructure, health and education. "We got 100 per cent approval," he says. "I don't have a problem with parliament."

The president laughed off his public dressing down by Mrs. Sukarnoputri. He has been busy winning support from the opposition parties that supported his defeated presidential rival, Prabowo Subianto. Leading members of three of the parties that backed Mr. Subianto now say they want to join Mr. Widodo's governing coalition.

"A lot of people underestimate him," says Hikmahanto Juwana, a professor of law at the University of Indonesia. "Sometimes in Indonesian politics you have to play nice in public," referring to Mr. Widodo's habit of compromising with his enemies.

The fallout from such struggles will help determine how successful Mr. Widodo will be in implementing his economic plans. He is clear that changes are vital. That is not only because the country's potential has long been sapped by corruption and a lack of infrastructure. The World Bank estimated that logistics costs amounted to 27 per cent of gross domestic product in Indonesia in 2013, compared with just 13 per cent in Malaysia and 8 per cent in Singapore.

In addition, Indonesia's economy is now growing at the slowest pace in five years, as falling demand from China has hit exports of coal, palm oil and rubber. After growing for many years at or near 6 per cent and peaking at 6.5 per cent in 2012, GDP expanded by just 5 per cent last year.

Mr. Widodo says Indonesia must find alternative engines of growth now that the days of high commodity prices — which represent more than half of its exports — are over. Domestic consumption, which accounts for about 60 per cent of output, has also shown recent signs of weakness, with sales of cars and motorbikes falling.

Economic focus

As the US interest-rate cycle turns and the rupiah weakens, Indonesia remains vulnerable to a repeat of the "taper tantrum" sell-off of 2013, when investors rushed out of emerging markets reliant on foreign financing. With international investors owning nearly 40 per cent of Indonesia's government bonds, even small reversals in sentiment could have an outsized impact on Southeast Asia's biggest economy.

Mr. Widodo professes not to be worried. Instead, he says, he will seize on current difficulties as an opportunity to remake the economy. He has already scrapped most fuel subsidies. He wants to shift the economy from what he sees as an over-reliance on consumption towards production and investment. In this light, a weak rupiah, if it helped make manufacturing more competitive, could be a boon, he says.

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Another huge challenge is the infrastructure bottleneck. Advisers say that, rather than theorising about policy, Mr. Widodo will seek to clear the path for specific projects, such as the $4 billion Japanese-backed Batang power station in electricity-starved central Java. He has promised to install 35GW of new power plants in the next five years, increasing the country's capacity by 80 per cent.

"Investors always complain about our infrastructure, our power plants, our business permit system and the land acquisition process," he says. "Now I'm concentrating on this."

Analysts are sceptical about whether such solutions can work in practice — or in time to offset possible outflows of hot money. There is no evidence of outflows yet, but there are fears of what will happen when US rates rise.

"As a mayor, Mr. Widodo used to text his people to fix a pothole," says Mr. Rowland. "But you can't do that when you have 34 ministers."

The manpower ministry recently floated the idea — eventually blocked when it reached the president's desk — of requiring foreign workers in the country to pass an exam in the Indonesian language. And the government has said it wants Pertamina, the state-owned oil and gas company, to take over Indonesia's largest gasfield from Total when the contract expires in 2017.

To his critics, these incidents show that Mr. Widodo lacks a grand strategy and proper control over his cabinet. The president seems to believe he can charm his way out of such problems. Addressing foreign investors at a recent World Economic Forum meeting in Jakarta, he asked them to "join me and my people on an incredible journey . . . and to make incredible profits". To much laughter, he added: "And if you have any problems, call me."

Foreign investors want him to deliver. When pushed, Mr. Widodo offers a non-committal "time will tell", though barring a political earthquake he has at least four-and-a-half more years to make good on his promises.

Many Indonesians are keeping the faith. "Everything still probably looks like business as usual because the president just started," says Dani, who works at Jakarta's Sunda Kelapa port. "But I'm still optimistic he will make a change in the future — because he's a good guy."

Making enemies: a foreign policy designed to pay dividends

Mr. Widodo's resolve to push ahead with the executions of mostly foreign drug convicts despite international condemnation is indicative of how he has shifted Indonesia's foreign policy since becoming president.

His predecessor, Susilo Bambang Yudhoyono, promoted a policy of "a thousand friends and zero enemies" designed to mollify critics and avoid tough issues. Mr. Yudhoyono was keen to win international approval and placed an unofficial moratorium on capital punishment, helping to underline his credentials as a conciliator and win him several international awards.

But Mr. Widodo has taken a more transactional view of foreign policy, centred around three goals: upholding sovereignty, protecting citizens abroad and promoting trade and investment.

"Many friends should bring many benefits," he said after his first overseas trip in November. The implication is that he is much more willing than Mr. Yudhoyono to upset other nations if it means promoting Indonesia's core interests.

Mr. Widodo's advisers are focusing their investment promotion efforts on China, Japan and South Korea, which are all keen to deepen their footprint in Southeast Asia.

Tom Lembong, a private equity investor who advises Mr. Widodo on economic policy, believes that despite the blowback of the executions, the president's focus on attracting international investment will pay dividends. "The president is in showcase mode, trying to get capital in and demonstrate his abilities through concrete achievements in the field," he says.