Press Release


Media Gathering
Media Gathering
Jakarta, Transformasi  — The new government under elected President Joko Widodo and Vice President Jusuf Kalla will face three major challenges in the next five years. These three challenges are dealing with oligarchy, promoting more than 10 percent economic growth, and utilizing the economic potential by implementing the appropriate development strategy.

This thinking came up in the discussion and media gathering event themed “Challenges for New Government in Political, Economic, and Social Aspects”, which was held by Transformasi in Graha Iskandarsyah, Jakarta, Thursday (11/9). The speakers for this event were the Director of the Social Sciences Program of Transformasi Jeffry Winters, Senior Advisor for Government Affairs of Transformasi Sarwono Kusumaatmadja, Senior Advisor for Economic Affairs of Transformasi Jonathan Pincus, and Executive Director of Transfomasi Nugroho Wienarto.

Jeffrey said that the first challenge of Jokowi-JK is whether they are able to consolidate their powers in order to effectively run the government. Consolidation in this case particularly means how they can convert some of the members from Red White Coalition (Koalisi Merah Putih) into a part of their government coalition, but remain steadfast in forming their own cabinet.

“This means Jokowi must be able to thwart the current oligarchy in the parliament. This is indeed like two contradicting elements. On one side, he must not only be able to pull parties from Red White Coalition to him, but also has to establish a non-transactional party. But that is the challenge presented to Jokowi to make his government efficient and effective,” said Jeffrey. 

He is positive that the Jokowi-JK still have a good chance to bring some supporters from Red White Coalition to his side. “The key rests in Golkar Party,” he added.

After the 2014 Presidential Election, he continued, an oligarchy power rises, in which its purpose is power sharing. The current effort to return to the indirect election with the Local Election Bill is a form of oligarchy, which is always characterized by transactional powers and money. “Oligarchy looks to take away the participative power of the people. This oligarchic agenda must be foiled,” he said.

In terms of cabinet formation, Jokowi-JK must avoid any oligarchic interest, which occurred during the Government of Susilo Bambang Yudhoyono (SBY). SBY’s cabinet emphasized more on political coalition interest, just like a zoo, marked by the low loyalty by ministers toward the president. As a result, the government did not run effectively.

Moreover, Jeffrey stated that 2014 Election was a big success for Indonesia, because the country can hold a procedural democratic party smoothly, peacefully, and its winner had only been known at the last stage

“In many other countries, election often leads to violence. In Indonesia that did not happen. This is considered a major success, the election winner in Indonesia had only been revealed at the final stage. This is an indication of a healthy democracy. This is different than in an authoritarian country, where the winner had been known even before the balloting was done” he said. 

Similar to what Jeffrey said, Sarwono stated that currently democracy is being hijacked by oligarchy. This is apparent through the efforts of Red White Coalition to accomplish the Local Election Bill, which brings back indirect election, despite the weak basis of such indirect election. “This is an ahistorical conduct from that coalition. Nonsense. Even if it is ratified, the Constitutional Court will definitely reject it,” conveyed the Former Marine and Fishery Minister.

Another success indication is President SBY voluntarily and peacefully stepping down. In many countries, shift of power is often rough because the incumbent tends to remain in power. The Phillipines is one example where the shift of power wasn’t so smooth due to the old leader insisting to remain in power. “But, that does not happen at this time in Indonesia,” continued Jeffrey.

The many lawsuits in the current Indonesian election also shows that political processes occur healthily. This indicates that the law is working. 

Growth Challenges

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Jonathan focused on the eminent challenges of Jokowi-JK government in the economic sector. According to him, there is nothing more important for Indonesia in the next 5-10 years than providing jobs for the people. This is because every year in Indonesia, two million new labor forces emerge. With the average economic growth of around 5-6 percent in recent years, only 800.000 of the new labours will be absorbed. The remaining 1,2 million people will have to be unemployed or work in the informal sector, with low wages and quality of life.

“If Jokowi-JK government fails to address this issue, it will be very dangerous,” he said.

The economic growth in Indonesia during SBY regime is heavily fuelled by resources boom, including prices of minerals, in the global market. This improves domestic economy greatly. Meanwhile, in the manufacturing sector, which should have been able to absorb labors, ceased to grow since 1995. Indonesian manufacturing sector is still behind China, Vietnam, India, and Thailand.

Moreover, Jonathan said that Jokowi-JK government has the opportunity to bring about double digit economic growth, or more than 10 percent. One of the reasons is the declining economy in China due to increasing labor wages and the shift to less labor intensive industrial sector. Some industrial manufacturing sectors from China will move to other countries. Indonesia has the chance to be the destination of such movement, because it has the most supportive resources compared to other Asian countries, including Thailand and Vietnam, particularly in terms of abundant workers.

“If just 10 percent of Chinese manufacturing sector moves to Indonesia, then there will be 21 new good jobs emerging. But, the question is whether the new government is ready for it,” he said.

Double digit growth, continued Jonathan, is very important in order for Indonesia to create new jobs for more than 2 million new labor force.” If it fails to take advantage of this opportunity, Indonesia will lose it forever,” he mentioned.

Nugroho highlighted the small budget able to be provided by the government to build infrastructure. The challenge for the new government is even greater, due to even smaller fiscal room caused by high gasoline subsidy. “Project like MP3EI is good, but if there is no budget, it will be hard to make it real,” he said.

Infrastructure development to support manufacturing should be adjusted accordingly with the availability of land, which is still important to meet food needs. He gave an example that 60 percent of domestic rice is supplied from Java. On the other hand, infrastructure in Java continues to be developed. As a result, the domestic food availability can be threatened. “This is a challenge for the government of Jokowi-JK in the future,” he said.

Demographical bonus, continued Nugroho, will also become quite a challenge for the new government. It is predicted that the peak of demographical bonus will occur on 2020-2025, which will be indicated by the boom of productive age population, reaching 70 percent of the total population of Indonesia. If not well prepared and the government fails to provide jobs, such demographical bonus will turn into disaster. Double digit growth becomes a demand that must be fulfilled in order to enhance the possibility of absorbing more workers with good wages.

In relation with economic growth issue, Transformasi will hold a book launching called “The Economic Choices facing the Next President,” written by a US economic professor Gustav Papanek, together with two Indonesian economists, Raden Pardede and Suahasil Nazara on 9th October 2014 at Four Seasons Hotel, Jakarta. This book addresses Indonesia’s opportunity to achieve double digit economic growth and will be attended by the Coordinating Minister for the Economy, Chairul Tanjung, as keynote speaker.

Maritime Potential

During the event, Sarwono also explained the importance for Indonesia to make the right strategy in utilizing its natural resources in supporting the improvement of people’s welfare. Maritime asset is the largest asset owned by Indonesia, in which it has not been well and efficiently utilized. Indonesia has an abundance of sea resources, in the form of maritime tourism, energy, conservation tourism, and other sea resources.

“Jokowi-JK has a vision to make us the center of world maritime. This is very good, but it must be strengthend by the correct maritime policy. All this time, it is unclear which is marine which is maritime, and they both are different,” he said.

Maritime supporting industry must also be prepared, such as establishing shipyard, and sea resources processing industry. Infrastructure development to support the economy must also be done equally. Sarwono asked if infrastructure projects like those included in the MP3EI agenda can focus to the Eastern part of Indonesia, instead of just the Western part. Such infrastructure projects must be adjusted with maritime development vision, considering most of Indonesian territory consists of sea. (HAN/Transformasi)

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