Since January 1 the rupiah has strengthened from 15,000 to 14,000, mostly on the heels of announcements from the Fed that it would not be raising the prime rate imminently. With a yawning current account deficit this development was met with a sigh of relief from Indonesia’s economic brain trust. They could certainly use it as 2018 had little to cheer about (exports and investments were down) even though 5.1% GDP growth was slightly better than 2017. Indeed, most analysts are predicting 2019 will bring more good news: economic stimulus from the Presidential and Parliamentary elections, recovery in some of Indonesia’s overseas markets. The US- Indonesia official diplomatic partnership turns 70 later this year and it will be AICC’s as well. Some readers may not know that a small group of rubber traders, coffee and spice importers, mixed with a handful of banks and oil companies and some intrepid attorneys supported the nascent Indonesian Republic’s struggle for sovereignty in the half decade after declaring independence at the end of World War II. At the end of it they formed AICC.
But for the news to be truly positive we would wish to see Indonesia shed some of the ballast that still weighs down its potential. Likewise, the US could do more to be on an equal and honest footing with the country that ranks just behind it in population size. But, lets be clear, as of 2019 our two nations and peoples are on some of the strongest ground we have been on since 1949. So what’s in the way ?
Americans remain anxious and uncertain over the narratives Indonesians create over things such as: religion(blasphemy), role of foreign capital, internal security, public vs private enterprise, role of the State, and the rule of law. Americans seek legal and policy consistency, becoming frustrated when they find ambiguity, or worse perfidy. Indonesians rightfully ask how committed the US is to the region when it withdraws from a regional economic agreement after leading the initiative and takes other steps that are perceived as indirect threats to its currency (possible repeal of GSP, Fed interest rate hikes, or palm oil restrictions).
Foreign creditors take pause when they see decisions in Indonesian courts that “stand the law on its head”. In a recent example, the Lippo Group seems to have engineered a much better bankruptcy settlement for one of its subsidiaries by having two of its affiliate companies file the initial petition and then settle on much better terms, leaving an Austrian creditor with very little. This page has commented on a West Jakarta court decision that declared a Singapore contract between a US firm and the Singapore subsidiary of a large Indonesian conglomerate void because it wasn’t written in the Indonesian language.
In a country that is proud of its heritage of religious pluralism and freedom of speech, a woman was jailed in 2018 for blasphemy for complaining about the loudness of a mosque speaker next to her house. This was not an idle case. Recently, the wife of a Christian was forced by community cemetery officials in central Java to allow the removal of a cross from her husband’s grave, apparently now only Muslims can be buried there. Cases like these harden people and can degrade the business climate.
Many heard an echo from the Suharto era this week when Attorney General Prasetyo claimed, ““We might have to conduct raids for books containing things related to the PKI [Communist Party of Indonesia] and we must confiscate those books wherever they may be”. Prasetyo seems to have ignored a Constitutional Decree from 2010 banning such raids without legal process. Double speak about the threat of Communism is also a metaphor for other restrictions on “outside influences”. A current draft law in Parliament would ban all music that had negative foreign influences and other “blasphemous” content. In today’s hyper-connected world I doubt you would find any young person or even the President himself- a heavy metal fan- concerned about “outside influences”. Most of us are about sharing our culture: food, music, dance, products.
Although Indonesia and the US have taken some strides to reconceptualize their shared anti-communist Cold War legacy both governments (especially Indonesia’s) continue to hold back documents about the tragic events of 1965 after a half century. Are not the people of both countries entitled to the full truth?
The labor law, with its uneconomic severance benefits, remains in place even as the nation’s chief investment officer, BKPM Chair Tom Lembong, decries its negative effect on manufacturing investment. Foreign oil and mining contractors – willing to spend their billions -are being shown the door replaced by inefficient state-owned companies spending precious public funds. The Indonesian people don’t hear an honest economic analysis and US companies—who have great respect for senior Indonesian leaders—wonder why the Ministers sound so welcoming of foreign investment but yet support policies that prevent more of it.
Maybe in this, our 70th year, a little more straight talk and honesty will shine through.
(The writer’s opinions do not necessarily reflect those of the American Indonesian Chamber of Commerce or its members)