Indonesia

‘Capitalism with Indonesian characteristics’: the role of State-owned enterprises in Jakarta's politics

The Indonesian economy is growing at a rapid pace, following a model that combines free market principles with State planning. During Jokowi's administration, state-owned companies have gained even more prominence. How will his successor Prabowo wield this tool?

Over the next twenty years, Indonesia could become the world's fourth-largest economy. Currently, it ranks seventh when measuring its GDP at purchasing power parity. The archipelago is endowed with abundant natural resources and a young, sizable workforce—two key factors for growth, albeit insufficient on their own. It also requires foreign investments and facilitating business activities. The Jokowi administration attempted to accomplish this in one fell and decisive swoop. In 2020, the Omnibus Law, a massive piece of legislation spanning about a thousand pages and touching many sectors, was passed. Even the trade policy follows the path of economic liberalization. Jakarta has intensified its diplomatic efforts to conclude an ambitious free trade agreement with the European Union and strongly opposes any foreign measure that may have protectionist effects on its exports, such as those from Brussels regarding palm oil.

Yet, despite the determined liberalizing push, State-Owned Enterprises (SOEs) continue to play a central role in the Indonesian economy, a role that has further strengthened in the last decade. Jokowism, as his government's economic doctrine is called, is a fusion of free market principles and robust State intervention. In Europe or the United States, where the market is deemed more efficient than the State by principle, such a mix would appear contradictory and even economically irrational. Not to Indonesians, nor to other Southeast Asian countries. This economic model, rewarded in recent decades by stable and vigorous GDP growth, predates Widodo and, as mentioned, is also present elsewhere in the region. In different forms, as described by Dr Gianmatteo Sabatino, a researcher at Zhongnan University of Economics and Law in Wuhan, in the excellent article The emerging trends of the modernization of state-controlled economy in the ASEAN space. The case of Indonesian State-Owned Enterprises (published on Rivista di Diritti Comparati, 1/2023).

Sabatino reconstructs how the Indonesian model of state-owned enterprise has evolved, starting from the commercial law of the Netherlands, which was transplanted into Indonesia during the colonial period, then passing through the regimes of Sukarno and Suharto. The independence process, officially sanctioned by the Indonesian Constitution of 1945, also involved the nationalization of Dutch public and private properties. Article 33 of the Constitution, still in force, states that ‘sectors of production which are important for the country and affect the life of the people shall be under the powers of the State’, as well as ‘the land, the waters and the natural resources’, which must be ‘shall be used to the greatest benefit of the people’. Article 33 also sets ‘economic democracy’ as the lodestar of the Indonesian economy. To implement these principles, Sukarno looked to the socialist economic planning model, also in line with his foreign policy of gradual rapprochement with the Soviet Union. This course was abruptly interrupted by Suharto's coup, supported by the United States to prevent Indonesia from definitively entering the Soviet orbit.

After brutally eliminating any socialist (or suspected socialist) elements, Suharto reversed course by promoting a liberalist economic model, albeit without much success. His reforms introduced corporate governance legal frameworks closer to those of Europe and America but clashed with the corporatism rooted in Indonesian society. Suharto's fall ushered in Indonesia's era of political-economic Reformasi, with the constitutional principle of economic democracy resurfacing and the emergence of a new ‘national’ development model. Despite demands from various sides, particularly from the International Monetary Fund, to continue with liberalizations and privatizations, Jakarta prefers to maintain the State's role in the economy. A well-administered public company can stimulate development and even facilitate the emergence of new private enterprises. Jokowi knows this well. His entrepreneurial career began as a manager of a State-owned cellulose factory and, after starting his own private business, the future president was repeatedly aided by SOEs in times of need.

However, Indonesian state capitalism is exposed to two serious risks. Private enterprises need personal and political contacts in the government to conduct business and cooperate with their State counterparts. A good network of contacts can keep a company afloat that would otherwise be destined to fail. This dynamic then produces the second problem: the risk of interest coalitions forming between ministries and companies that degenerate into corruption or paralyze decision-making processes. This is a significant problem, as a corrupt and unstable political system can deter the much-sought foreign investment. A ministry may put aside more important political goals to prioritize protecting the companies it owns, even at the expense of clashing with other ministries. For example, negotiations with the EU for the free trade agreement were greatly hindered by internal divisions within Widodo's cabinet, with each ministry taking sides for or against certain issues. Perhaps the Ministry of Agriculture would want to reject every European request regarding palm oil, even at the cost of completely blocking the negotiations, to appease a core constituency of the minister. The Ministry of Industry, on the other hand, would be eager to conclude the agreement as soon as possible, to gain greater access to the European market for (its own) manufacturing companies. 

Widodo's successor, former general Prabowo Subianto, may rely on SOEs to promote his policies, unless he intends to change this economic doctrine. It is unlikely that he will, considering that Jokowism is extremely popular and allows for mobilizing the country's growing economic resources for other purposes. It is more difficult to anticipate what these purposes will be. Fulfilling the constitutional principle of economic democracy? Growing the economy, fairly and sustainably, or just focusing on the GDP growth percentage? Or perhaps strengthening his own power system? The proliferation of SOEs under Jokowi recalls a similar trend observed in Xi Jinping's China. The key difference is that in Indonesia, the actions of ministries, and thus their enterprises, can be subject to political debate and change from one legislature to another. As Sabatino points out, the timing of development planning is appropriately synchronized by Indonesian law with elections. Electoral results impact the business choices of SOEs. Borrowing a famous expression associated with China, the ‘capitalism with Indonesian characteristics’ presents unique and undoubtedly interesting elements, as it is an alternative and almost opposite to Western capitalist practices, destined to lead the archipelago to the podium of world economies.

Who are the candidates for the presidency of Indonesia?

Prabowo, Defense Minister and retired general, is the favourite. His deputy is Gibran, son of his historic rival and outgoing President Joko Widodo

By Tommaso Magrini

Here we are. A few days and presidential elections will be held in Indonesia. On February 14, one of the world's largest democracies goes to the polls to choose its next leader. According to the election commission, around 205 million of Indonesia's more than 270 million people have the right to vote, and around a third of these are under 30. The presidential poll will be held on the same day as the national parliamentary elections, and voters will also choose executive and legislative representatives at all administrative levels across Indonesia.

The favorite appears Prabowo Subianto. Suharto's son-in-law and former head of the special forces, the retired general has in the past been accused of being among those responsible for the repression of student protests, the disappearances and extrajudicial killings of opponents, and human rights violations against Papua's minorities and East Timor. After his dismissal from the army and a few years of self-exile in Jordan following an attempted coup, Prabowo is now convinced that in the elections on 14 February he will be able to become president of the largest economy in South-East Asia. In the last ten years, Prabowo had twice attempted to run for the presidential palace in Jakarta, but was defeated by the reformer Joko Widodo.

This time Prabowo really believes it, after joining the government in 2019 as Defense Minister. According to President Widodo, Prabowo was chosen as Defense Minister because "he has vast experience in that field". As Francesco Radicioni, Radio Radicale correspondent from Bangkok, explains, "the macho law-and-order military pose has been archived, now Prabowo shares with his millions of followers on Instagram and TikTok posts with relaxed and captivating tones that have earned him an avalanche of likes and enthusiastic comments: the most used word online is «gemoy», an expression that sounds like «adorable»” . 

The real twist, however, came when Prabowo announced that his vice-presidential candidate would be Gibran Rakabuming Raka: born in 1987, young mayor of a small town on the island of Java, but above all son of the same President Widodo. A truly surprising move, given that in Indonesia the law sets the minimum age to run for vice-presidency at 40. However, on the eve of the presentation of the candidates, the Constitutional Court decided that that limit should not be applied to those who have already won a local election. 

And the challengers? Ganjar Pranowo is the candidate of the ruling Indonesian Democratic Struggle Party. His long career in public service, most recently as governor of Central Java, has earned him a following outside the capital Jakarta. In opinion polls he is second in the rankings behind Prabowo. And then there is the independent candidacy of Anies Baswedan, already at the helm of the capital's government and for a few months also minister in Jokowi's administration, before moving to the opposition. 

Even if Prabowo is considered the favorite today, analysts question whether the ex-general will really be able to win over the voters who over the last ten years have wanted to reward Widodo's liberal and reformist agenda. If no one manages to obtain an absolute majority of votes on Wednesday 14 February, Indonesia will return to the polls in June for a run-off. In August, however, the capital will move from Jakarta to Nusantara, in Borneo: the last legacy of Widodo, who however hopes to see his political dynasty continue with his son as vice president.

Elections in Indonesia: the issues of the vote

The Indonesian presidential elections take place on Wednesday 14 February. The vote is highly anticipated to understand who will be Joko Widodo's successor

By Aniello Iannone

On December 12, the presidential debate in Indonesia brought together presidential candidates Ganjar Pranowo (PDI-P), Prabowo Subianto (Gerindra) and Anies (AMIN coalition composed of (PAN): the National Commitment Party, a moderate nationalist party and Islamic, and (PKS): the Justice and Prosperity Party, an Islamic political party that is based on the principles of Islam and seeks to implement policies in line with Islamic values ​​in society and government.The vice presidential candidate next in Anies Baswedan, Muhaimin Iskandar, is the secretary of the party.Finally, the (PPP): the Unity and Development Party, is a political party formed by Islamic organizations, whose policies are centered on the principles of Islam and active participation in nation building and development. ), who debated Indonesian political issues. Among the topics discussed were the fight against corruption, the protection of minorities, the Papua issue, the democracy index and economic development. Although the debate highlighted the differences in the candidates' programs, the ethical question, in particular linked to Gibran, Joko Widodo's son and vice-presidential candidate, added a unique complexity in view of the upcoming elections, among the most significant post-Soeharto.

Family matters

The choice of vice president plays a crucial role in Indonesian elections, particularly involving those who may not fully identify with the presidential candidate. This dynamic emerged clearly during the 2019 elections, especially after the scandal of the Ahok case, the former governor of Jakarta who in 2018 was accused of blasphemy, from which Joko Widodo had to face instability and political criticism, especially from radical Muslim groups in Indonesia, such as the Muslim Defense Front, who accused him of being a communist and of Chinese descent. The use of political identity in Indonesia partially reflects the country's historical and political process, not based on narrative ideology, but on political identity.

In this context, during the 2019 election campaign, Jokowi chose Ma'ruf Amin, a senior representative of the Indonesian Muslim organization, as a strategy to gain the support of a Muslim population skeptical of his party. This choice has proven effective, although it has prompted questions from nationalists who struggle to identify an identity connection between PDI-P and Ma'ruf Amin.

The political situation in Indonesia has reached partly paradoxical situations. After his defeat in the 2019 elections, Prabowo, the defeated candidate, surprisingly took over as Defense Minister in the Jokowi 2.0 government, a key role that helped reduce and weaken the opposition. This event, along with subsequent strategic maneuvers during the 2024 election campaign, raised suspicions about the direction of Indonesian politics. Jokowi's shadow is cast over the vice president elections, with Gibran, son, current mayor of Surakarta, proposed as vice president candidate.

Gibran, currently 36 years old, should not have been able to run as he is below the age limit allowed by the Indonesian constitution to become vice president, i.e. 40 years. However, through a legislative reform, Constitutional Court judge Anwar Usman, (husband of Idayati, sister of President Joko Widodo) initiated the initiative to change the rules to the advantage of Joko Widodo and Gibran. This maneuver resulted in the reduction of the minimum age to run for office from 40 to 35, with special provisions requiring at least one term as mayor. In practice, it is an ad-hoc law designed specifically for Gibran.

A few months before February 14, election day, the political landscape in Indonesia is preparing to face inevitable conflicts between coalitions and alliances. Joko Widodo always seems closer to the Gerindra party rather than the PDIP. If Prabowo-Gibran were to win, Joko Widodo is likely to take a key role, perhaps in a ministry, acting as a mediator between Gibran and Prabowo, forming a nuanced third term. However, the prospect of Prabowo-Gibran's victory raises not only political, but also social questions. Questions arise about what factors push the population to vote for a party composed of a person accused of human rights violations and crimes against humanity, like Prabowo, and a young man who grew up in his father's shadow.

This situation raises interesting questions about the political and social awareness of Indonesian voters. Entrusting political responsibilities to leaders with a controversial history and the promotion of a political heir become elements of profound reflection in the context of the country's democratic framework. It is hoped that the community will be able to weigh the weight of moral considerations and human rights in the context of their political choices, perhaps opening a new chapter in Indonesia's political history. The outcome of the upcoming elections will not only determine the composition of the government, but may also influence the international perception of Indonesia and its position in the global political landscape. There remains a big question mark over how Indonesian society will respond to this crucial challenge and how the election results will shape the country's future.

The World's Oldest Pyramid? In Indonesia

A team of researchers found that Gunung Padang was built primarily by human hands and found evidence that the structure was built in multiple phases, thousands of years apart

By Tommaso Magrini

A hidden pyramid on a hill on the island of West Java, Indonesia, may be the oldest in the world. This was revealed by an interdisciplinary team of archaeologists, geophysicists, and geologists in an article published in the interdisciplinary archaeological journal Archaeological Prospection. Gunung Padang, also known as the "mountain of enlightenment," is located atop an extinct volcano and is considered a sacred site by the local population. In 1998, Gunung Padang was declared a national cultural heritage. Over the years, there have been divergent opinions among scholars about the nature of the hill. Some argued that it was a man-made pyramid, while others claimed it was a natural geological formation. The research team discovered that Gunung Padang was primarily built by human hands and found evidence that the structure was constructed in multiple phases, thousands of years apart. According to the team, the oldest construction of the pyramid "likely started as a natural hill of volcanic ash before being carved and then architecturally wrapped" between 25,000 BC and 14,000 BC. This means that Gunung Padang is at least 16,000 years old. According to the study, the pyramid was completed between 2000 BC and 1100 BC. The team, which documented the site study, drilled into the mound's center, excavated trenches, and collected soil samples, among other things. This helped researchers dig into the early layers of Gunung Padang, more than 30 meters below its surface. "This study strongly suggests that Gunung Padang is not a natural hill but a pyramidal construction," the researchers state in the document. The team also found evidence of "a large cavity," possibly a hidden chamber, within the pyramid.

Understanding the Upcoming Indonesian Elections

In February 2024, Indonesians will cast their vote. But what will the post-Jokowi era look like?

By Anna Affranio

Southeast Asia's political arrangements are on the brink of a momentous change, as Indonesia will soon bid goodbye to a decade of rule by Joko Widodo, the hugely popular president who has been in office since 2014. Indonesian law, in fact, allows only two presidential terms, which means Widodo will not be able to compete in the election round to be held next on February 14th.

Last October 25th was the deadline for registering presidential candidates. At present, the three pairs of candidates running for office (in Indonesia, presidential candidates always run in pairs with their respective vice presidents) are headed by Prabowo Subianto, Ganjar Pranowo, and Anies Baswedan.

This election campaign seems to follow the trend, known to Indonesia, that sees voters and the media focusing more on the charisma of leaders and agreements between oligarchs and party leaders rather than the details of political programs. However, many analysts have observed how each of the three pairs represents a different vision for what the future of Indonesia might look like. 

Prabowo Subianto, the current Defense Minister, is considered the favorite in the latest polls. The latter, 72 (the oldest among the candidates), comes from an elite family and enjoys a large following despite numerous controversies that have beset him. He has, in fact, been accused of human rights violations related to the kidnapping of pro-democracy activists during the riots that marked the country in the late 1990s, although he has always denied any involvement. He is also the former son-in-law of the late authoritarian President Suharto and in previous elections, has formed alliances with conservative Islamic groups and divisive political parties. This coalition, however, benefits from the (tacit) support of the outgoing president. Although the latter and Prabowo have had some problems in the past, the candidate has announced that he wants to continue the project of Nusantara, the new designated capital, which is Jokowi's main political legacy. Finally, the latter certainly appreciated the choice to appoint Gibran Rakabuminag Raka as potential Vice President, none other than Widodo’s eldest son.

The second candidate in the race is Ganjar Pranowo, current governor of Central Java province. Fifty-five years old, he is perhaps the one who most resembles outgoing President Jokowi, with whom he shares a humble family background and a deft ability to appeal to the masses. This is why he receives extended support among ordinary people and enjoys wide popularity among young people and social media, particularly on TikTok. In addition, he is the candidate supported by the PDI-P (Indonesian Democratic Party of Struggle), the same populist-oriented party that had supported Joko Widodo in the previous two elections. 

The third candidate, Anies Baswedan, 54, former governor of Jakarta, is losing popularity in the polls. Despite being educated in the United States and publicly declaring his support to moderate Islam, has been accused of association with the radical Islamic movement, raising concerns among religious minorities and moderate Muslims. This is related to the fact that Anies, during the 2017 Jakarta gubernatorial election, accepted support from radical Islamic groups lashing out at his opponent, then-Jakarta governor Basuki Tjahaja "Ahok" Purnama, a Chinese Christian who was later jailed for insulting Islam. 

In conclusion, this election is not only a race among candidates, but also among different ideas of the Indonesia of tomorrow: a return to the reactionary past, the continuity of a democratic polity, or a possible move toward religious radicalism. It will be fascinating to see which path the Indonesian people choose, and the coming months will be crucial in determining that choice.

Indonesia GDP trends in 2023

Government spending soared an impressive 10.6 percent.The economy is expected to continue its growth trajectory, with an estimated range of 4.5 to 5.3 percent

By Lorenzo Riccardi

Indonesia's economy experienced robust growth in the second quarter of 2023, with a year-on-year increase of 5.2 per cent. This exceeded initial market expectations of a 4.9 per cent gain, showcasing the nation's economic resilience. Building upon the slightly revised 5 per cent expansion in the first quarter, this quarter marked the ninth consecutive period of economic growth and the most vigorous pace seen in the past three quarters.

One of the significant drivers of this growth was the acceleration in household consumption, particularly during the fasting month of Ramadan and the Eid-ul Fitr festivals. Household consumption surged to 5.2 per cent, a notable increase from the 4.5 per cent recorded in the first quarter. This festive season's positive influence on spending contributed significantly to the overall economic upswing.

Additionally, both government spending and fixed investment played pivotal roles in propelling the economy forward. Government spending saw an impressive uptick of 10.6 per cent, a substantial rise compared to the 3.4 per cent growth in the previous quarter. Fixed investment also displayed strong growth, expanding by 4.6 per cent, surpassing the 2.1 per cent growth seen in the previous period. These factors collectively underscored the government's commitment to stimulating economic activity.

However, the balance of trade didn't fare as well, as net trade exerted a negative influence due to declines in both exports (down by 2.7 per cent) and imports (decreasing by 3.8 per cent). These trade-related challenges highlighted the potential areas for improvement within the international trade landscape.

From a production perspective, multiple sectors demonstrated accelerated growth compared to the previous quarter. Agriculture, for instance, experienced an upswing of 2 per cent, a notable increase from the 0.4 per cent growth recorded in Q1. The manufacturing sector maintained its momentum with a growth rate of 4.8 per cent, up from 4.4 per cent. Similarly, the mining sector expanded by 5 per cent, outpacing the 4.9 per cent growth observed earlier. Other sectors like wholesale and retail trade (5.2 per cent growth), communication (8 per cent growth), and construction (5.2 per cent growth) all exhibited enhanced performance in contrast to the previous quarter's figures.

Looking ahead, the central bank's projection for this year indicates that the economy is expected to continue its growth trajectory, with an estimated range of 4.5 per cent to 5.3 per cent. This forecast highlights the authorities' cautious optimism about the country's economic prospects despite potential global uncertainties.

Comparing this with the previous year, Indonesia's economy expanded by 5.3 per cent in 2022, marking its most substantial growth since 2013. This previous growth milestone underscores the nation's ability to overcome challenges and tap into its economic potential.

In summary, Indonesia's economy showcased impressive growth in the second quarter of 2023, surpassing market forecasts. Driven by increased household consumption during festive seasons, robust government spending, and stronger fixed investments, the country's economic expansion remains on a positive trajectory. While trade posed some challenges, the overall production landscape demonstrated encouraging growth rates across various sectors. As Indonesia aims for continued growth in the face of uncertainties, its recent economic achievements build upon the substantial progress made in the preceding year.

From Indonesia a new circular economy

We publish here an excerpt from an article by Bambang Susantono, Chairman of the Nusantara Capital Authority, in Nikkei Asia

In the heart of Borneo's island forests, the development of Nusantara and its surrounding area is now underway. The new capital's population is projected to reach 1.8 million by 2045.

Staying true to the green vision behind it, the new capital city will be largely encircled by the existing forest, which will be protected.

But it is the city's circular economic model that will translate Nusantara's green vision into meaningful everyday practices.

For example, the new city will implement a comprehensive and well-coordinated system that prioritizes reduction, reuse and recycling, with 60% of Nusantara's waste to be recycled by 2045 and all of its water supply treated through a recovery system by 2035.

This approach will not only minimize the amount of waste generated but also ensure that valuable resources are recovered and reintegrated into the economy.

The circular economy will also offer a win-win approach for investors and communities. According to a joint study by Indonesia's National Development Planning Agency and the U.N. Development Programme, the full implementation of the circular economy approach across the key industrial sectors of food and beverages, textiles, wholesale and retail trade, construction and electronics could create 4.4 million jobs in Indonesia and raise the country's economic output by $45 billion by 2030.

Nonetheless, a full implementation of the circular economy approach will require greater collaboration between the public and private sectors.

By involving businesses, entrepreneurs and investors in the development and implementation of circular economic models, Nusantara will unlock more opportunities for growth and job creation, while minimizing environmental impact.

Areas of collaboration currently being explored include the establishment of recycling facilities and green infrastructure projects that could further cement the new capital's position as a pioneer in sustainable urban development. To attract investment and drive sustainable growth, we have launched comprehensive investment incentives, including tax breaks for businesses that adopt circular economy practices. In addition, tax holidays of up to 30 years and other tax deductions will be given to corporations engaging in research and development and to investors who adopt strict environmental, social and governance standards.

By aligning economic incentives with environmental goals, the new capital will be an attractive destination for forward-thinking investors committed to sustainability.

The success of the new capital's zero-waste, zero-emission infrastructure can serve as a catalyst to combat plastic pollution on a national and global scale as its developing blueprint can become a reference point for similar mega projects.

What legacy will Widodo leave for Indonesia?

Self-made man of humble beginnings, Indonesia's first president without a political dynasty or the military behind him. With only a few months left in his second and final term, Joko Widodo remains wildly popular, and his successor will likely emerge from his entourage. Outstanding story of a leader who embodies the strengths and contradictions of his country

Joko Widodo is almost always referred to by the nickname "Jokowi." Shortening names and titles or giving nicknames is a widespread habit in the spoken Indonesian language, but it seems that the president's nickname was coined by one of his French business partners. Prior to entering politics, Jokowi was involved, with some success, in manufacturing and exporting furniture made from the fine timber of the tropical forests of the Indonesian archipelago. This was, in some ways, the family business, although his father carried it out on a much smaller scale. In fact, Jokowi had been born in the home of a carpenter in Surakarta, a town in Central Java, who sold the furniture he made on the street. After studying forestry engineering, Widodo first worked in a state-owned pulp mill and then opened his own company, joining the trade association. Business did not take off at first, and in the early 1990s, Jokowi was in danger of bankruptcy, but was saved by a loan from a state-owned company. The company manages to grow through exports, mainly to Europe and, in particular, France. In short, Widodo's entrepreneurial success was built on the support of state-owned companies and exports, two elements that would later be central to his economic policy, dubbed Jokowism by some entrepreneurs.

Furniture manufacturers are an influential industry group in Indonesia, and Widodo, president of the association for the city of Surakarta, is ready to enter politics. In 2005, he won the election for mayor of Surakarta, and his administration proved extremely popular due to its tough on crime and promotion of tourism. The successful entrepreneur now mayor, however, does not forget his humble beginnings and often visits the city's slums, where he promotes social housing and access to education. Appreciated policies that Jokowi will replicate on a larger scale in his later posts. His popularity is sky-high, and in 2010 he is re-elected mayor with more than 90 percent of the vote. On the strength of that result, just two years later he aims for the position of governor of Jakarta and is elected. A position he holds for a short time, as in 2014 his party, the PDI-P (Indonesian Democratic Party of Struggle) nominates him as its candidate for the country's presidency. Jokowi's meteoric political career is built on his talent for appearing as a "man of the people" who does not forget his origins, capable of getting things done, and sincerely interested in improving the living conditions of poorer Indonesians.  

The PDI-P's choice of Widodo was exceptional for the dynamics of Indonesian politics. The then Jakarta governor was neither a former army officer like his rival, former conservative general Prabowo Subianto, nor the scion of a political dynasty like PDI-P leader and daughter Sukarno Megawati. Before him, all of Indonesia's presidents had belonged to one of two categories, but for Widodo and the PDI-P the anomaly could become the lever with which to lift the party after years of electoral debacles. Jokowi presented himself as a new man, estranged from the establishment and close to the people. Like so many other leaders in the same years, Widodo wins with a populist platform that put the fight against corruption at the center. The election was a triumph, Jokowi beating Prabowo with 53 percent of the vote and repeating the success in 2019, again against Prabowo, with 55 percent. To this day Jokowi remains wildly popular, with approval ratings around 76 percent. It is difficult to hear critical voices against the president, not least because offending him can lead to 18 months in prison, as happened to an 18-year-old Sumatran boy in 2017.

Widodo is indeed a democratically elected leader, willing to relinquish power at the end of his two terms as required by the Constitution, but he is also the leader of a "hybrid" democracy. Power is contestable in elections, but dissent is suppressed when he raises his voice too much or steps out of the groove drawn by the government. Somewhat vague laws against defamation and "blasphemy" have been written during the Widodo administration and are now broadly interpreted to restrict freedom of expression, assembly and association. Another gray page with regard to fundamental rights is a recent and unprecedented assumption of responsibility by Jokowi for certain incidents of violence perpetrated by the Indonesian state in the past. This is only a partial step forward, as the president has been silent about the crimes committed by the military during the occupation of East Timor and the violent repression still perpetrated against West Papuan natives demanding independence from Jakarta. The promise to fight corruption has also remained unfulfilled. Rizal Ramli, a longtime politician and former minister in the first Widodo government, recently wrote in The Diplomat that under Jokowi "the hands of the clock have turned back," as the president's clique has proven to be "horribly corrupt, with huge conflicts of interest." Widodo keeps quiet and lets it be, so as to keep opposing interest groups together and maintain power. Former rival Prabowo has also been co-opted as defense minister.

Despite the fact that corruption is a very serious problem and perceived as such by the public, Indonesia's economy is growing and experiencing no crisis. Jokowism seems to be working and remains popular. Mindful of his personal experience, Widodo sees the country's wealthy state-owned enterprises as a useful tool for guiding its economy and infrastructure toward its goals of economic as well as social development. In this, the president has been successfully assisted by his minister of state-owned enterprises Erick Thohir, an entrepreneur known in Italy for buying and leading Inter Milan for a number of years. Another tenet of Jokowism is the search for new markets and investment abroad. Indonesia recently held the chairmanship of both the G20 and ASEAN, placing great emphasis in both forums on trade and economic growth. And Jokowi has been able to find many investors, especially in China. Beijing's presence in the country has increased greatly, both in investment and in the presence of Chinese workers, a category that is often the victim of violence. This is a somewhat uncomfortable topic for the administration, which has been criticized in the past by the opposition for "selling out" the country to China and is now committed to keeping anti-Chinese sentiment in check.

Although it is difficult to predict who will be Jokowi's successor, he will certainly be a Jokowist in economics. Appearing in continuity with the popular outgoing president will be necessary to emerge from a still crowded pool of contenders. The two most likely names seem to be former rival, now ally, Prabowo and official PDI-P candidate Ganjar Pranowo, governor of Central Java. The two could even ally and run as a ticket, in absolute continuity with the grand coalition supporting Widodo. If Jokowi entered politics without coming from a power dynasty, he is coming out having created one of his own: his sons have already begun to groom themselves, and the eldest son is already mayor of Surakarta, the city from which Widodo's rise began. We will hear more about them. In any case, the fact that the post-Jokowi transition is taking place in a democratic manner demonstrates the strength of Indonesia's democracy, albeit a "hybrid" one. A democracy full of contradictions that required an out-of-the-box politician like Jokowi to lead it: as capable and effective as he was condescending to the corruption and vices of the system.

Indonesia's nickel rush

More and more countries and international investors are looking closely at Jakarta's huge mineral resources

Article by Tommaso Magrini

In 2022, Indonesia produced 1.6 million tonnes of nickel, more than any other country. It is tied with Australia for the world's largest reserves, with 21 million tonnes. Hoping to move its country up the commodity value chain, President Joko Widodo's government banned exports of unprocessed nickel ore in 2020. Several governments and multinationals are increasingly moving to secure access to Indonesia's vast nickel reserves. South Korean steel producer POSCO Holdings said it plans to spend USD 441 million to build a nickel refinery on the Indonesian island of Halmahera in North Maluku Province. Construction is scheduled to begin later this year, with the aim of starting operations in 2025. POSCO's refinery will produce nickel intermediates for use in rechargeable batteries that could power the equivalent of 1 million electric vehicles. German chemical manufacturer BASF and French mining company Eramet will invest $2.6 billion in a refinery in North Maluku, which will produce a nickel-cobalt compound used in EV batteries. Foreign direct investment in the Indonesian metals sector reached about USD 10.9 billion in 2022, with almost 60% coming from mainland China and Hong Kong. Meanwhile, Indonesian operators are moving to list themselves on the stock exchange. Better known as Harita Nickel, Trimegah went public on 12 April, raising nearly 10 trillion rupiah (USD 673 million), one of the largest IPOs of the year. Merdeka Battery Materials, a nickel smelter under the Merdeka Copper Gold umbrella, conducted its own IPO shortly after, raising 9.2 trillion rupees. Merdeka Battery collaborates with a unit of Chinese battery giant Contemporary Amperex Technology (CATL).

Indonesia and India lead the Global South

Jakarta and New Delhi chair ASEAN and G20 in 2023. By strengthening cooperation they can promote the vision of a steadily rising part of the world

Among the many ambitious goals of Indonesia's rotating chairmanship of ASEAN is to strengthen the role of Jakarta and the Southeast Asian bloc in the Global South. And, moreover, support the role of the Global South in world affairs. The intention was made explicit by Sri Mulyani Indrawati, Indonesia's Finance Minister, in a relevant interview with Nikkei Asia. "We will work very closely with India," Indrawati said. "India and Indonesia are among the few big emerging countries that are performing very well on the economy, so this relationship provides us with more influence and more respect globally." Then again, Jakarta and New Delhi share a common perspective on international affairs and crucial diplomatic engagements in recent years. In 2023, India inherited the rotating presidency of the G20 from Indonesia itself, which in turn precisely holds that of ASEAN. Countries in the Global South tend toward political neutrality and avoid taking sides during conflicts. Despite the tensions, many consider the G20 summit in Bali in November a success, with leaders issuing a statement condemning Russia's aggression in Ukraine. While proposing a peaceful solution that protects not only security but also the resilience of trade and globalization. A perspective that will also be supported by India. "The G7 is admitting that it needs a counterpart that can provide a balanced view ... providing greater inclusiveness and diversity within the global community, which is healthy, I think," said Indrawati, who argues that countries in the global South are "contributing constructively to the global agenda," she said. "They have also become a source of solution for many global problems in terms of climate change, financial crisis, pandemic or even now global economy." This is precisely why the 10 ASEAN countries can play a "very important role," not only economically, but also politically and in terms of regional security "because of the tensions between the United States and China." And in Jakarta’s view, deepening cooperation with another regional player like India can strengthen the role of a rising part of the world in all aspects.

A film encourages the debate of gender justice in Indonesia

Sri Asih is the cinematic adaptation of Indonesia's first comic book superhero. It celebrates a female character, the reincarnation of the goddess of justice. But the message of empowerment contrasts with restrictions on the rights of women and the LGBTQ+ community

A volcanic eruption gives birth to Alana, a true force of nature, reincarnation of the warrior goddess who is the main character of the Indonesian movie Sri Asih. Released in cinemas in November, it is directed by Upi Avianto and tells the story of the first superhero in comic book history in Indonesia: a young fighter who grows up without parents, is passionate about kickboxing and soon discovers that she has been chosen to exert the will of Dewi Asih, the goddess of justice, on Earth and restore balance to the world. The timing of this cinematic success, which adapts the famous 1950s comic book, reintroduces a much-loved character from Indonesian pop culture, precisely at one of the most difficult historical junctures for women and the LGBTQ+ community in Indonesia.

The movie is part of the Bumilangit Cinematic Universe superhero blockbuster and it has been included in the lineup of the International Film Festival Rotterdam, that runs from 25 January to 5 February 2023. It is a product that mixes the typical action of the Marvel and DC universes with cultural references from South-East Asia - from martial arts to all the imagery related to local mysticism, with demons and benign spirits clashing in challenges to the death. A superhero-themed action film that has nothing to envy from the most celebrated US sagas.

"I was surprised and amazed to learn that the first ever superhero in a country with such a strongly patriarchal culture at the time was a woman," director and screenwriter Upi Avianto told Nikkei Asia. The story had already been the subject of a film released in 1954, the reels of which have been lost. But Sri Asih's celebration of women's emancipation clashes with the current, progressive exacerbation of religious conservatism in the country.

The tight control of women's role in Indonesian society has resulted in the laws increase for compulsory use of the hijiab in several provinces, and some parts of the revised penal code. The latter law, unanimously approved by parliament, will come into force within three years. The new document 'contains provisions that violate the rights of women and girls to comprehensive and inclusive education and information on sexual and reproductive health,' said Andreas Harsono of Human Rights Watch. By punishing extramarital relationships, the new code risks disproportionately affecting same-sex couples who are barred from marriage.

"More than anything else, this is a clash between tradition and modernism - and about whether one's family accepts one's sexual choices," said one protester interviewed by the Guardian, "there is the clause that [extramarital sex] is only considered a criminal act if reported by a close relative - parents, spouse, children - and not by any random offending party." Indonesia's transgender community could suffer the most from the new law, as LGBTQ+ people 'are more likely to be sued by families for relationships they disapprove of,' Human Rights Watch recently stated.

The new regulations have provoked public demonstrations and protests against the imposition of conservative moral values on sexuality. The fate of gender justice in Indonesia seems very uncertain and the situation is still far from matching the liberating message portrayed in the superhero adaptation Sri Asih.

Omnibus Law and the financial sector in Indonesia

The long-awaited financial sector reform Jakarta has been working towards has been approved. Here is what will change

Article by Aniello Iannone

After nearly three years of negotiations, the Indonesian House of Representatives approved the Financial Sector Development and Strengthening Reform (UU PPSK) on 15 December 2022. The reform, which will change the rules of financial law, especially for the investment sector, will be managed through an omnibus law, the type used for labour reforms in 2020 and 2021 for reforms related to the harmonization of tax regulations. The financial sector development and strengthening law (PPSK), which consists of 27 chapters and 341 articles, underwent essential changes in 17 articles.

The new reform will be the gold standard for the regularisation of businesses such as venture capital, carbon markets, and cryptocurrency markets. However, it will also regularise financial institutions such as banks, insurance centres, and gold banks. In addition, the new law reforms the competencies and powers of the Central Indonesia Bank (Bank Indonesia or BI), the Financial Services Authority (Otoritas Jasa Keuangan or OJK), and the Deposit Insurance Corporation (Lembaga Penjamin Simpanan or LPS).

Under the new law, Bank Indonesia can purchase long-dated government bonds in the primary market. In practice, the central bank can print money to finance government spending in a financial crisis that could threaten the national economy. Previously, BI bought government bonds in the primary market at an interest rate, became a reserve buyer if investors failed to reabsorb government bonds, and bought domestic bonds even at a 0% interest rate. This measure, called 'burden sharing,' was practised during the Covid-19 health crisis as the pandemic hit state revenues. Burden-sharing measures should only be used when necessary. Nevertheless, the new reform has become a non-stop policy in case of an economic crisis. However, it needs to be better explained in the reform what constitutes a state of crisis, meaning that the reform could be a tool if the government needs cheap tax revenue.

Instead, a prominent role was given to OJK, which was structurally reformed. OJK Board of Commissioners increased from 9 to 11 members. Chief Supervisor of Financial Institutions, Venture Capital Firms, Microfinance Institutions, and Chief Supervisor of Financial Sector Technological Innovation for Digital Financial Activities and Crypto Activities were created. The new law allows OJK to supervise and manage fintech and digital finance activities, including cryptocurrency markets. It is precisely cryptocurrency-related activities (previously managed by BAPPEBTI, the Commodity trading regulatory body) that fall under ITSK, as new forms of technology in the financial sector must be regulated and supervised. From now on, it is OJK that must manage them. In addition to OJK and BI, LPS has also changed its role. Initially, one of the main tasks of LPS was to guarantee public deposits in banks. In contrast, the Omnibus Finance Law mandates LPS to guarantee insurance policies.

Conclusion 

Financial sector reform is long overdue in Indonesia. It aims to improve, secure, and accelerate a sector that in Indonesia, as Finance Minister Sri Mulyani Indrawati has said, relies on outdated regulations. Like other reforms, it also has some shortcomings. For example, it is still being determined who will be selected as directors of the three primary financial authorities, BI, OJK, and LPS. The law clearly states that they cannot be active leaders of political parties, but there is no actual mechanism to protect this principle.