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Indonesia As the New India

Taken from businessweek. What do you think?

Indonesia As the New India

This stable democracy with a hot market economy resembles another Asian giant in the 1990s.

George Wehrfritz and Solenn Honorine

NEWSWEEK

From the magazine issue dated Oct 20, 2008

Jakarta today could be any of Asia's 21st-century boomtowns. The malls buzz, traffic snarls and modern office towers dominate the skyline. It all feels profoundly normal—but that's big progress in a place that, barely ten years ago, seemed destined for ruin. Following the fall of longtime strongman Suharto, and with Indonesia reeling from the 1997-98 Asian financial crisis, many analysts feared that Asia's third-biggest country (population: 235 million) would go the way of Yugoslavia. Instead, it has become a cohesive, robust and exuberantly democratic moderate Muslim nation. Things are so buoyant that Indonesia invites comparison to another Asian giant: India.

Both remain corrupt, chaotic and excruciatingly complex. Yet each is also an attractive emerging economy, and in India's case, a star of the developing world. Could Indonesia be next? Its economy grew by 6.3 percent last year, the main stock exchange ranks among the world's best performers since 2003 and last year foreign direct investment nearly tripled, to a respectable $4 billion. All of which resembles India in the 1990s, when reforms kick-started a potentially massive economy—though outsiders barely noticed until the IT sector took off and growth passed 8 percent. In Indonesia, the key sectors are energy, mining and soft commodities like rubber, palm oil and cocoa. And in an exclusive interview, President Susilo Bambang Yudhoyono says he sees no inherent reason why a big democracy like his can't grow as fast China, which has posted 10 percent growth rates in recent years.

That would put Indonesia on a lot of magazine covers. In fact, the country already looks better than India in two ways: its per capita income ($3,348) is a third higher, and thanks to Jakarta's fiscal austerity, it now boasts one of the lowest debt ratios in the world. "After ten years of restructuring, Southeast Asia's largest economy is in great shape," says Nicholas Cashmore, CLSA's country head and chief researcher in Jakarta.

Indonesia's political turnaround has been just as dramatic as its economic one. The president, known universally as SBY, is a former general who was elected in mid-2004 and has since become the country's most effective democratic leader. In four years, he has helped Indonesia roll up its terrorist problem and rebuild from the 2004 tsunami. Less appreciated (but more enduring), he has backed a profound political decentralization program, empowering hundreds of local administrations. Jakarta now rules by consensus, not decree. This has its downsides: it makes it impossible to railroad through big national development projects of the sort China is famous for. As SBY himself admits, "in many circumstances, we face local communities that don't agree with government projects, so we have to convince them. I do not think the system is wrong. In a democracy like ours, change, reform and resistance are normal."

The country's largest parties now basically agree on economic policy and the need to reduce corruption, improve the rule of law and make government more efficient. Key democratic institutions—including a free press, impartial courts and a legislature chosen by voters—are remarkably robust, and the once all-powerful military has largely removed itself from politics. Meanwhile, regional autonomy has triggered economic booms at the periphery, in contrast to the typical Southeast Asian model. "From the U.S., the U.K. or even Hong Kong," writes Cashmore, "it is difficult to comprehend the magnitude of Indonesia's potential [or] appreciate just how much more there is to the country beyond Jakarta." By his calculation, greater Jakarta now accounts for just 15 percent of Indonesia's GDP, a relatively small share compared to other Asian capitals.

Indonesia's accomplishments are all the more impressive when you remember how far and fast the country has come. The fall of Suharto's New Order (a highly centralized system that vested absolute power in the dictator and his cronies) 10 years ago was accompanied by a financial meltdown so severe that the IMF had to step in. Indonesia also faced fierce separatist insurgencies, Christian-Muslim violence and Islamic extremism underscored by the 2002 Bali bombing. The country seemed to be teetering on the brink of wholesale disintegration. Yet today, as Australian National University economist Andrew MacIntyre and the Asia Foundation's Douglas Ramage argued in a recent report, observers should start thinking of Indonesia "as a normal country grappling with challenges common to other large, middle-income, developing democracies—not unlike India, Mexico or Brazil."

In some ways Indonesia's democracy is even more sophisticated than those other states'. Take decentralization. Jakarta, like New Delhi, oversees national defense, internal security, finance, foreign policy and the justice system. But unlike the Indian government, Indonesia's—thanks to two "big bang" reform packages passed in 2001 and 2006, and supported by SBY—must now coordinate most other activities through the country's 33 provinces and nearly 500 local administrations, where popularly elected leaders make policy, manage two thirds of all civil servants and oversee everything from schools to economic development. As World Bank economists Wolfgang Fengler and Bert Hofman observe in a soon-to-be-published study, Indonesia has turned itself from "one of the most centralized countries in the world into one of the more decentralized ones."

To see what that means on the ground, follow the money. Under a new fiscal system implemented in 2001, regions are allocated a huge slice of the country's budget to spend more or less as they please. Poor and remote areas receive the most per capita, and those with abundant natural resources get shared extraction revenues. According to the World Bank, regional governments in Indonesia now account for 36 percent of all public expenditures, compared with an average of just 14 percent in all developing countries. And locals can promote whatever agendas they choose. "This is the real revolution," says Erman Rahman, who heads the World Bank's local governance initiatives in the country. Regions with proactive leaders have become laboratories of experimentation from which innovative anti-corruption, public-health and economic-growth initiatives have emerged. For his part, SBY has enabled this process by maintaining macroeconomic discipline and political stability. And his support for local autonomy has undermined separatism, extremism and communal violence.

One regional pioneer, Gamawan Fauzi, took power in West Sumatra's Solok region in 2001 and quickly created a one-stop shop for government services, replacing an opaque and complex web of offices and brokers. Fauzi's concept was to bring all government services under a single roof, post set fees, promote autopayment and guarantee prompt service as a means of rooting out corruption. And it has worked: the model has since been emulated across Indonesia, and Transparency International reports that corruption, while still high, has been reduced substantially.

Other local leaders have earned fame by initiating innovative new programs. Gede Putrayasa, who heads the poorest of nine regencies on the tourist island Bali, won office in 2001 on a pledge to provide universal medical insurance and free education. The latter proved relatively easy (he simply waived the 5,000 rupiah monthly fees), but improving health care without breaking the local budget was tougher. Under the old system, funds went to hospitals and local administrators, who did things like stockpile pharmaceuticals procured from companies that paid kickbacks. Putrayasa's innovation: provide every local household free health insurance that compensates clinics for services actually provided. "There's not a big savings," says Putrayasa, "but everyone is covered and the efficiency is much better because there is no longer any corruption."

Such reforms have stimulated economic growth. Putrayasa's health-care and education initiatives (as well as a jobs program that sends underemployed rice farmers to Japan) have reduced the local poverty rate fourfold to just 5.5 percent today. Better local governance has also made Indonesia a major beneficiary of the global soft commodity boom. Together, the value of its four largest crops—rubber, coconut, palm oil and cocoa—rose from $2.3 billion in 2000 to an estimated $19 billion in 2008, CLSA calculates. That's thanks to local leaders like Fadel Muhammad, governor of the hardscrabble province of Gorontalo on the island Sulawesi, who turned his constituents into the country's best corn farmers by deploying teams of agricultural consultants; providing subsidized seeds, fertilizers and rental machinery to farmers; and giving cash rewards to village leaders who boost yields. Since 2002, Gorontalo's poverty rate has shrunk from 49 to 29 percent.

Of course, decentralization has its problems. Analysts and watchdog groups say that while the number of effective leaders in the 500 local administrations has spiked from a handful to 50 or more under SBY, they are sometimes particularly effective at blocking necessary national reforms and projects. The result, says Ramage, is that progress will be "evolutionary, not revolutionary." For example, the Trans Java highway, which would link Jakarta with Indonesia's second-largest city, Surabaya, was launched in 2004 with a target completion date of 2009, but is still only 10 percent done because of local opposition.

Nonetheless, Indonesia has already become a beacon of stability in Southeast Asia and the Islamic world. Its antiterrorism campaign—Indonesia has shut radical madrassas, established an effective counterterrorism force and cracked down hard on suspected cells, while also avoiding human-rights abuses—is seen as a model for the region. And as the world's most populous Muslim country, Indonesia's democratization has implications from Morocco to Mindanao in that it exemplifies an alternative to zealotry, intolerance and extremism. "Indonesia is not immune to radicalism we see worldwide, but this is exactly why we must maintain our identity as a moderate, tolerant nation," says Yudhoyono. "It enables us to prevent a clash of civilizations."

SBY is likely to win re-election next year, but even if he loses, analysts don't expect any sharp change in policy, because all the major political camps in Jakarta agree on the current reform blueprint. Even India does not enjoy that kind of stable consensus on how to catch China.

With Greg Hunt in Hong Kong

Kita Memang belum Berpikir (se)Panjang (itu)

Konon, karena kita hidup di daerah tropis, maka kita tidak biasa berpikir panjang. Di negara-negara dengan 4 musim, di musim panas orang-orang harus bersiap-siap untuk musim dingin. Di negara kita tidak, semua tumbuh sepanjang tahun.

Apakah benar bahwa itu yang terbawa sampai saat ini, saya tidak bisa memastikan. Saya sendiri merasa tidak bisa berpikir terlalu detail dan terencana, apalagi buat yang jangka panjang. Dalam bisnis misalkan, saya punya rencana jangka panjang. Jangka panjang itu ya paling 5 tahun. Cukup panjang buat saya. Itu pun agak sulit dibedakan, antara rencana dan angan-angan.

Pemerintah kita, juga terkena sindrom yang sama. Apalagi sekarang-sekarang, di mana mereka dinilai setiap 5 tahun. Dulu jaman Megawati, rotan mentah diperbolehkan ekspor langsung. Mungkin pemikirannya, karena ekspor rotan mentah secara langsung mempependek proses mendapatkan uang. Jadi rakyat yang saat itu sulit mendapatkan uang bisa cepat memperoleh rejeki. Dan jelas, menaikkan angka laporan ekspor.

Kalau pun setelah bertahun-tahun kemudian muncul dampak seperti hancurnya industri furniture lokal, ya itu kan sudah beda presidennya.

Sekarang misalkan, subsidi energi 100 trilyun lebih. Kemudian SBY-JK meluncurkan program konversi (ke gas) dan pembangunan pembangkit listrik 10 ribu megawatt bertenaga batu-bara. Kalau ini selesai, 2-3 tahun lagi pemerintah bisa mengalokasikan dana lebih dari 50 trilyun yang tadinya dipakai untuk subsidi ke alokasi lain.

Jadi mungkin presiden berikut akan bagi-bagi subsidi (pendidikan, kesehatan) sambil bilang,"Dulu SBY-JK nggak begini toh?". Padahal itu bukan jerih payah dia juga.

Sayangnya, umumnya orang Indonesia bermemori pendek. Jadi selain tidak berpikir panjang, memorinya juga pendek. Klop. Misalkan, 2009 SBY-JK kalah, 2014 mereka bisa mencalonkan diri. Kemungkinan semua orang sudah lupa kenapa mereka dulunya tidak lagi memilih SBY-JK.

Pagi ini ada berita menarik di detikcom. Korea mengajukan perpanjangan kontrak LNG yang akan habis di 2014 dan 2017. Dan berikut respon pemerintah Indonesia yang diwakili oleh Menteri ESDM Kalau anda ingat, ngomong-ngomong, Pak Purnomo inilah Menteri ESDM ketika berkali-kali harga BBM naik. Presidennya boleh ganti, Menteri ESDMnya tetap. Mungkin dianggap sukses ya.

O iya, kutipannya begini:
"Mereka meminta perpanjangan kontrak LNG yang akan selesai 2014 dan 2017. Tapi itu kan masih lama, kita belum bisa komit karena harus memastikan kebutuhan domestik dulu," katanya.

Jadi dari sini kita bisa melihat, untuk Indonesia 2014 itu masih lama. Buat Korea sih, mungkin sudah dekat.

Peringkat ITB untuk IT dan Engineering

Tahun lalu, di panduan majalah Tempo kalau tidak salah, untuk teknik, ITB diakui masih nomor 1 di Indonesia dengan perbedaan skor cukup jauh terhadap pesaing terdekat (kalau tidak salah ITB di 840 dan yang berikutnya 760, 740, dst.

Hanya saja untuk IT, posisinya kalah dari Bina Nusantara. Ini agak menghentakkan dada juga. Jadi saya baca metodologinya.

Ada dua penilaian: angket dari user dan angket dari awam. Yang dimaksud user adalah pengguna produk yaitu perusahaan perekrut, mahasiswa (yang kuliah) dan sebagainya. Yang kedua adalah yang di luar itu, termasuk kakek-nenek yang tidak pernah sekolah (ini hiperbola).

Hasilnya, dari sisi user, ITB masih nomor 1 dengan nilai yang cukup jauh (dibandingkan dengan perbedaan nilai urutan 2 dan 3). Sedangkan, untuk sisi awam, Bina Nusantara nomor 1. Setelah nilainya digabung dan dirata-rata, ternyata totalnya masih tinggi Bina Nusantara. Jadilah Bina Nusantara nomor 1.

Saya meragukan metodologi ini, berapa pembobotan persepsi user dengan persepsi orang awam? Kesannya disamakan 50:50.

Tapi sudahlah. Ini salah ITB juga. Dari dulu saya selalu protes di blog. ITB itu sok. Nggak merasa perlu marketing. Padahal di mana-mana buku sekarang menunjukkan trend bahwa penting sekali untuk merekrut bahan terbaik (dalam kasus ini mahasiswa). Dan prestise ITB, harusnya sarana terbaik. Kita bisa melihat sekarang kekuatan marketing diimplentasikan di Bina Nusantara. Saya nggak bilang Bina Nusantara jelek. Saya hanya membahas datanya.

Nah, baru saja ada kabar, untuk IT dan engineering di dunia, katanya peringkat ITB sekarang 90 dunia, dibandingkan 114 di tahun sebelumnya (2007). Saya pikir perlu dianalisa apa perubahan yang terjadi antara 2007 dan 2008. Jadi bisa naik lebih tinggi lagi.

Anyway, selamat buat ITB.

Saya Masih Belum Mengerti Ekonomi

Saya nggak ngerti. Dulu waktu Indonesia krisis, dollar (USD) melambung. Sekarang Amerika krisis, koq dollar juga yang melambung ya...

Ada yang bisa bantu menjelaskan?

Lintang Sudah Gede...

aNggak terasa sudah 1 tahun umurnya Lintang. Sekarang sudah besar. Sudah bisa menentukan maunya. Kalau sedang mau main, ditaruh di tempat tidur, geleng-geleng. Kalau sudah mau tidur, diajak main, nunjuk-nunjuk tempat tidur.

Tapi yang terasa, dia kalau sudah ada maunya, bisa dijalanin terus. Salah satu hobinya ngejar cicak. Jadi satu malam, sambil menidurkan dia, saya cari cicak sambil memegang sapu lidi, memukul-mukul gorden, pigura foto, dsb. Siapa tahu ada cicak di situ.

Waktu cicaknya nggak ada, dia tidur sambil melihat ke arah AC (tempat terakhir di mana cicak terlihat). Setelah satu jam, dia belum tidur, sambil ngantuk-ngantuk menunjuk ke arah AC. Ya ampun, masih ditunggu juga.

Sejak itu, dia punya hobi baru. Pokoknya setiap lihat muka bapaknya, langsung menunjuk ke sapu lidi, minta saya mencari cicak. Kalau diikutin, bisa berjam-jam saya disuruh cari terus.

Secara umum, alhamdulillah, anaknya baik. Nggak pernah nangis nggak jelas.

Mudah-mudahan jadi anak yang sehat dan sholehah.

Ini fotonya dengan Kakeknya, dan fotonya waktu sedang marah-marah.