Democracy and Development
Indonesians are worried about democracy and development, or at the least those that work at Indonesia’s leading English language publication, The Jakarta Post, and spoke at its 40th anniversary event: “The Sustainability of Democracy in Southeast Asia”. The event and subsequent editorials show significant concern over the direction of democracy and economic development in Indonesia as well as the region at large. A variety of speakers, including Nobel Prize winners Maria Ressa and Jose Ramos Horta, noted the ascension of the sons of autocrats Hun Sen and Ferdinand Marcos to the leadership of Cambodia and the Philippines, the military-backed Thai government and its sidelining of a popular candidate for Prime Minister whose party won a recent national election, Vietnam’s one-party rule, and Myanmar’s junta. I was struck by the comments of several speakers who decried a “digression” in Indonesia’s democracy, including attempts to postpone the 2024 election, plans by Indonesia’s major political party to return the old system where voters chose parties not candidates, and the return of the military to civilian roles. A Jakarta Post editorial commented: “the plot would wind back the clock to a New Order-style electoral arrangement and allow party elites to have complete control over which legislative candidates sat in the House of Representatives.” .” The increasing role of active military officers, who have been placed in senior ministerial positions usually reserved for civilians, over the last 5 years also was also discussed: “What we saw late last month, when soldiers in military fatigues strode into the Corruption Eradication Commission (KPK) headquarters and demanded that graft charges against two active TNI officers be dropped, was the consequence of countless small political exceptions that have once again normalized the military’s role in politics.”
Following logically in its listing of threats to democracy is the candidacy of Prabowo Subianto, President Suharto’s son in law. Like most of the corporate and military titans of the autocratic, New Order regime, Prabowo has adapted and prospered in post-Suharto era. He currently has a 10-point lead in polling. The loser in the 2014 and 2019 Presidential elections has a strong social media campaign and has a legitimate chance.
For the Post, who has championed democratic reform throughout its history, Prabowo, could be a threat: “And now, as the country prepares to enter its fifth election cycle after the fall of Soeharto, it appears the journey of the Reform Era has come full circle. A key figure in the New Order era, a military general who once had a familial bond with Soeharto, is now the leading candidate for the presidency in 2024. We may want to believe that today’s political figures have an interest in playing by the rules and maintaining the current democratic arrangement, but we must also prepare ourselves for the possibility that things could take turn for the worse – and that it could happen quickly.” Ominous words, no doubt.
Prabowo’s popularity rests on the fact that over 50% of voters are too young to remember the turbulent period surrounding the fall of Suharto in 1998 and Prabowo’s role in arresting activists. For older Indonesians, they may have some nostalgia for the Suharto era when prices for the 9 essential daily products (rice, oil, meat etc.) were much cheaper.
At the Post’s forum speakers from the government and private sector lauded Indonesia’s democracy as forming the basis for economic resilience and development. Deputy Finance Minister Suahasil Nazara said “democracy was important for a country’s economic growth and also served as a tool to equitably share that growth among the population.”
Some speakers acknowledged that development could occur without democracy or that some states that are newly democratic struggle economically. They all thought Indonesia was able to achieve both. But if we look at the 25 years before and after democracy was reinstated in Indonesia in 1998 the numbers reveal a slightly different story.
Looking at World Bank data, in the period 1974-1998 Indonesia averaged 5.69% annual GDP growth with many years at 7-10%. Since 1998 growth has only averaged 3.99%, with just a few years above 6%. Compared to its higher income neighbors (Thailand, Malaysia and Vietnam) Indonesia outgrew Vietnam in the 74-98 period and lagged the other countries by a full percentage point. In the period since 1998, Vietnam is the clear growth leader at 6.41% with Indonesia leading Thailand (2.98%) and behind Malaysia (4.25%). The 1998 currency crisis and the 2020-2021 pandemic may explain the overall growth shortfall. Growth and democracy are not always proportional.
What Indonesia’s economic history reveals is that autocratic government can lead to high levels of growth and democracy can sustain growth but at a lower level. Like Americans, Indonesians may see its 2024 election as a referendum on democracy, but it need not worry that its economy will automatically suffer if it returns to a more autocratic form of government. In the words of a coffee roaster I recently visited whose been buying Indonesian coffee for 40 years, “Governments come and go; we still get our shipments”.
The bigger issue is no matter what form of government Indonesia chooses, it needs to find a way back to the pre-1998 days of 7% growth, the number economists believe leads to full employment of Indonesia’s approximately 2 million new entrants to the labor force.
(The view representing are the writer’s own and are not necessarily shared by members of the American Indonesian Chamber of Commerce)