Waiting for Indonesian Leadership; Fifteen years after Suharto, corruption has undercut political and economic progress at every turn

June 4, 2013, 9:38 a.m. ET

Waiting for Indonesian Leadership

Fifteen years after Suharto, corruption has undercut political and economic progress at every turn.


A little more than 15 years ago, on May 21, 1998, Suharto stepped down from the Indonesian presidency and ended three decades of autocratic rule. Student demonstrators, white collar professionals, laborers and housewives alike poured into the streets to celebrate. Suharto’s successor, B.J. Habibie, quickly promised reform.

Today in the streets of Jakarta, the din of protest and change that defined 1998 is a distant memory. While Indonesians appreciate the voting rights and civil freedoms gained that year, many also wax eloquent about the “good old days” under Suharto.

They do so because democracy has not brought Indonesia far-sighted leadership. The good news in Indonesia has been widely recognized and recently celebrated—increases in foreign direct investment, continued press freedom, a stable banking sector, solid growth rates—but underneath lies a restlessness for real change that would affect the common person. Elections next year offer the country’s politicians a chance to restore voters’ faith in democracy and reform-–but they also create a dangerous opening for illiberal candidates to lead the country astray by playing on ill-founded nostalgia.

Romanticizing the authoritarian past is a common affliction in new democracies—especially in countries such as Indonesia where corruption has undercut political progress at every turn. Greater regional autonomy after Suharto, for instance, has led Indonesians to realize that most local governments cannot deliver on basic public services. A few local leaders have been placed behind bars for corruption, but a distrustful public believes that many more should follow.

Similarly, reforms that gave greater power to Indonesia’s legislative branch have chiefly bred an almost rabid dislike for national legislators. Bills that should have been passed by the National House of Representatives—for example, to improve the vastly underfunded public health-care sector—remain either unwritten or unimplemented. Instead, the government has taken more interest in morality laws and protections for elites’ financial interests. One draft bill currently pending, for instance, would define adultery and cohabitation before marriage as crimes punishable by up to five years in jail. The new law wouldn’t include stiffer sanctions for acts of corruption.

Indonesia’s problem isn’t democracy per se, but rather an absence of leadership. None of Suharto’s successors have met the expectations of a public eager for reforms. After more than a decade of talk about developing Indonesia’s infrastructure, there has been meager progress. Trade and investment regulations are introduced under the banner of “the national interest” and the common citizen, but protectionism in industries such as mining and horticulture has more to do with elite rent-seeking than distributive justice. The result is that while Indonesia’s economy has grown consistently, so too has inequality. This is not the inequality common in developing economies where some people rise up the income ladder earlier than others but most people eventually have opportunities. Rather, it bespeaks a failure of political leaders to open new opportunities while those who have already “made it” get richer.

To break this cycle, Indonesia’s new president in 2014 will need to be an avid reformist who ensures that Indonesia’s democracy translates to prosperity and dignity for a wider percentage of the population. But will such a candidate emerge?

The victory of Joko Widodo in last year’s gubernatorial elections for Jakarta gives some hope that such a candidate can be found—and elected. Mr. Joko’s ascendance reflects an emerging reality in Indonesia’s politics: Voters, many of them young and hungry for inspirational leadership, have grown tired of the country’s decadent political establishment.

Unlike most in the Jakarta government and on the national stage, Mr. Joko has a common touch. Having grown up in the poorer parts of the central Javanese city of Solo, he first parlayed his forestry degree into profitable furniture-manufacturing companies, then began his unlikely ascent to be mayor of his hometown in 2005. Within a few years, his management yielded a much-improved local economy and a decline in street crime. He earned kudos from many quarters (including the national government, which named him one of the country’s outstanding local leaders), and came to be known especially as a clean politician. He even managed to keep broad popularity while having a Catholic vice-mayor, deep in the heart of territory known for breeding Indonesia’s hardest-line Islamic preachers and followers.

Since entering office last year, Mr. Joko has focused on some of Jakarta’s more pressing needs, such as better public transportation, flood control, low-cost housing and health care for the poor. While it is too early to tell if he’ll be more successful than his predecessors, for many in Jakarta and beyond, he represents a break from the past—and maybe a future candidate for president. All political parties are now looking for their own “Joko” or sidling up to him.

While there is much to celebrate about Indonesia since 1998, the old elite are like baleful ghosts from the Suharto era, holding Indonesia back from realizing its full potential. Now that the dictator has been gone for a decade and a half, it’s time for a new generation of voters and reformers to exorcise the country’s illiberal forces once and for all.

Mr. Kurtz is head of Asia-Pacific for A.T. Kearney, where Mr. Van Zorge is a senior fellow.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: