2018 No. 96, 31 October 2018
In a seminar hosted by the ISEAS-Yusof Ishak Institute on 29 October 2018, Mr Sandiaga Salahuddin Uno, one of Indonesia’s leading business people and vice-presidential candidate from the Great Indonesia Movement Party (Gerindra), shared his insights on “Indonesia’s Future Economy”. He cited some critical challenges faced by the Indonesian economy that he believed were holding Indonesia back from achieving greater growth and prosperity. Mr Sandiaga’s observations were based on his experience as a successful businessman with a background in finance and investment. In addition, he also discussed what he thought would be key points of debate in the campaign for the 2019 presidential election.
The coming election would no longer focus on religious or ethnic issues, which had divided the nation. Instead, the focus would be on the economy, in particular, how to boost the country’s growth, create more jobs and ensure low food prices. He argued that even though Indonesia’s economic environment had improved significantly since the 1997-98 Asian Financial Crisis, there were some structural issues that continued to leave the country vulnerable. He referred specifically to the widening trade and current account deficit, as well as de-industrialization, which contributed to Indonesia’s sluggish manufacturing exports. In addition, he argued that investors were avoiding the country due to the uncertainty of laws and regulations, making the business climate unpredictable.
In the discussion, Mr Sandiaga mentioned that Indonesia could not afford to become complacent with good macroeconomic indicators, while in reality people were still struggling with the high prices of basic commodities and lack of job opportunities. The government needed to pay attention to micro issues, such as how people felt about their household situation. In Indonesia recently, he had claimed that the price of a plate of chicken rice was more expensive than in Singapore. This triggered a heated debate in the Indonesian media. Citing World Bank figures comparing prices of rice and chicken of the same quality, Mr Sandiaga argued that Indonesians paid higher prices for their meals compared to people in Singapore, a country that had limited natural resources.
Many of the challenges that Mr Sandiaga highlighted has been plaguing Indonesia for decades: inertia in the bureaucracy, sluggish tax reform, poor industrial relations, and unequal economic distribution. The economy is also dominated by state-owned enterprises, which crowds out the private sector. He cited, as an example, infrastructure projects that did not provide sufficient room for private companies to be involved.
Many of Mr Sandiaga’s ideas for a future Indonesian economy focused on being more business-friendly, such as the reforming of the country’s rigid labour laws, which had hindered investment growth. In the future, Indonesia should also promote the development of renewable energy and digital economy. Furthermore, he suggested that Indonesia might have to import more staple goods in order to lower the cost of living and ease the financial burden of ordinary citizens.
Indeed, many of the challenges pointed out by Mr Sandiaga are also high on the priority list of the Joko Widodo administration. However, whether such issues will interest the electorate remained to be seen, since political personalities rather than programmatic promises tended to matter more in Indonesian elections.
Dr Siwage Dharma Negara is Senior Fellow and Co-Coordinator in the Indonesia Studies Programme at ISEAS – Yusof Ishak Institute.
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