Prabowo’s seamless presidential transition | East Asia Forum

Indonesia’s third directly-elected president Prabowo Subianto was inaugurated in Jakarta on 20 October with the pomp and circumstance befitting the transition from one elected leader to another in Asia’s second-biggest democracy.

In his inaugural address, Prabowo offered up a demure version of his campaign stump speech, exhorting the elite to unify to relieve the suffering of the poor and defend Indonesia’s economic sovereignty and uphold the tradition of non-alignment in foreign policy. Progressives suspicious of the former general’s democratic credentials will have taken note of Prabowo’s call for a ‘polite’ and ‘distinctively Indonesian’ democracy ‘suitable’ to the country’s culture, typical anti-liberal dog whistles favoured by conservative politicians.

Prabowo’s first cabinet, deftly unveiled in the week leading up to his inauguration, reflects the things that look set to shape his early presidency: the legacy of his pre-election alliance with Joko Widodo; the continuation of his predecessor’s tradition of all-encompassing party coalitions; and Prabowo’s own penchant for rewarding loyal political foot soldiers.

A bright spot is the reappointment of Sri Mulyani Indrawati as finance minister, whose tenure in the role now spans 13 years and three presidencies. With financial markets wary of Prabowo’s instincts towards government largesse, her presence in the cabinet will ensure strong oversight of public finances. Sri Mulyani stands apart from the other holdovers from the Widodo cabinet who have leveraged their importance as political and financial powerbrokers to cling on to office.

Sri Mulyani notwithstanding, one wouldn’t describe this cabinet as a team of reformers. Prabowo has hewed to the norm of buying political stability by rewarding parties and other stakeholders such as major Islamic organisations, big business and the military with lucrative ministerial positions.

Loyalty to Prabowo has paid dividends for a number of incoming ministers personally close to him — most of all Sugiono, an MP and senior official from Prabowo’s Gerindra party who’ll become the first politician to hold the foreign affairs portfolio since 2001, following a string of ministers with experience holding senior diplomatic positions. Sugiono will be a credible representative of Prabowo abroad, but it’s unclear whether his appointment will see the energisation of the foreign affairs bureaucracy towards presidential goals or its sidelining in policy development.

Hints at Prabowo’s vision of Indonesia’s place in the world were on show when he gathered presumptive cabinet ministers at a ‘retreat’ at his hilltop estate in Jakarta’s hinterland last week. A briefing on global geopolitics was delivered by John Mearsheimer, the realist ne plus ultra, whom Prabowo has reportedly invited in his capacity as defence minister to deliver similar seminars to staff at the ministry. Just what lessons Prabowo might be taking from Mearsheimer’s analysis of international politics is anybody’s guess. But the dismissal of the ability of multilateral institutions to mitigate the structural tendency of the international system towards conflict is hopefully not one of them, as ASEAN faces a do-or-die challenge of reasserting its relevance that will need consistent Indonesian engagement to succeed.

How Indonesia charts a role in the region over the coming years will be less dictated by academic theory than the very mundane guns-or-butter problem that Prabowo immediately faces, as his ambitions to build up Indonesia’s military power exist in tension with imperatives to boost government revenue for the purposes of more public investment in welfare, health, education and infrastructure.

As M. Chatib Basri writes in this week’s lead article, ‘Indonesia faces significant hurdles’ on its way to achieving the goal, now enshrined in policy, of becoming a high-income economy by 2045, not to mention achieving Prabowo’s stated goal of bringing economic growth up to 8 per cent.

A crucial ingredient is greater investment from the state and business. The first element entails much better efforts to raise Indonesia’s chronically underperforming tax-to-GDP ratio, while ‘improving the quality of spending … including reallocating fuel subsidies to direct subsidies, education and healthcare’ — and Prabowo notably found room in his inaugural speech to call for the redesign of subsidy schemes along those lines. Amid signs of stagnation in the expansion of the middle class, Basri calls for the ‘encouragement of foreign direct investment into export-oriented sectors’ to make Indonesia ‘a global production hub, like Vietnam’ as one among the immediate priorities to boost quality job growth.

The policy prescriptions are clear, but the politics are murky. ‘Jokowinomics’ has worked quite well for a decade, but without being augmented by improvements to Indonesia’s policy environment and investment climate, openness to foreign investment will remain a theoretical blueprint to escape the middle income trap over the longer term.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.