Fall of the Asian old world: Indonesia battles conundrums

Jakarta, August 22, 2015

Asia bonds over the common political narrative of dilemma – as governments in chorus strive to take on the entrenched orders of corruption, complacency, uncertain political transformations and economic downslides — the latter having spread like a malaise devouring the continent’s traditional economies and trajectories of growth.
Indonesia is an interesting example of the Asian miasma that has allowed power equations to polarize between the Mandarin-speaking Oriental bloc and the Indian sub-continent in terms of political influence and diplomatic leverages in the Asia-Pacific region; without redressing the power imbalance by creating buffer cushions.
The Asian chaos, as many foreign affairs analysts like to identify, has been aggravated by the troika of Indonesia, Malaysia and Thailand – three traditional centres of growth and power — which have been in the decline for more than several decades under the shadow of China, Japan, South Korea and even the Philippines to a certain measure. The recent bomb blasts in Thailand – on August 17 – is evidence enough that the traditional Asian economies are not in a position to withstand assaults on their socio-cultural and political bulwarks that spill directly into the fragile economic lifelines.  Indonesia, a populous archipelago of approximately 255 million people, is currently in the midst of a difficult metamorphosis from the complacency of the 1980s to an integration with the greater global sync of unified trade and tariff – and a homogenous brand of Asian modernism that takes into stride the traditional narratives as well. It is a difficult change given the vicious spiral of corruption, devaluation of the currency “rupiah”, economic downturn and the fear of a rerun of the 1998-1999 crash In an attempt to stave off an economic disaster Prime Minister Jokowi Widodo re-shuffled his Cabinet this month to bring aboard an odd half a dozen veterans from the cold. They have been tasked with rejuvenating the laggard economy – to turn it around with infusions of foreign funding.
The hopes of resuscitating the economy in the short term are misplaced for on August 12 alone, the Indonesian “rupiah” touched 13,788 against the dollar — which economic watchers declared as one of the weakest since the 1998 financial crisis. “The rupiah rate is already competitive, already undervalued, so there is no need for us to perform a deliberate currency depreciation,” senior deputy governor of Bank Indonesia Mirza Adityaswaran sent out in a text message. That was not enough. The country seemed poised on the precipice, commented a market insider about the crisis besetting the commercial counters in the capital city of Jakarta. The Jakarta Composite Index, the main price indicator in the Indonesian Stock Exchange, plunged by 3.1 per cent on Aug 12, a keel never seen since 2014. The Bank Indonesia’s foreign exchange reserves fell steadily in the past few months to touch $ 107.6 billion in July end. Sources said the crisis was precipitated by the fact that the bank had been aggressively pumping dollars to pull the dozing markets out of the red.
The streets of Jakarta narrate the story of the country’s lean cycle. Overpopulation and unchecked migration from the countryside and the smaller islands to Jakarta in search of new urban livelihoods – forsaking the traditional agriculture and the plantation jobs — has exerted tremendous pressure on the city’s infrastructures fraying civic amenities like housing, water, transport and jobs at the seams, pointed out a senior journalist from the Jakarta Post. “The migrants, who pour in by the hundreds every day, look for homes to live in the city,” she said. The consequence — shantytowns jostle for space with swanky highrises and glittering shopping arcades in the heart of the capital’s commercial district, which choke at the arteries with pollution and traffic jams caused by a sea of mortor-cylists — most of it made of a quaint two-wheeled public taxi service.
“The traditional population who inhabit the urban sprawls on the edge of the capital refuse to move to government housing complex because they like in smaller homes with land around them,” the journalist said. The mindset still reeked of a pastoral time-warp — of villages imposed within the city, she suggested.The shoppers’ arcades— like many other developing Asian countries — are virtually deserted. The motley groups of shoppers, who stalk the neon vestibules overlooking the high-end brand kiosks on either side, are mostly tourists and youngsters, the latter inclined to hanging out in the malls during the day-time. Business transacted is not commensurate to the wares on display and belie the “projected market movement” prophecies. The haunting memories of the 2005 Bali bombings and 2009 Ritz Carlton/Marriot Hotel bombings in Jakarta still arrest the psyche of the nation – impeding the free flow of outsiders and the leashing the natural joie d’vivre of holiday resorts like Bali and Java.
The disparity between the “marginalized” classes and the moneyed lot is glaring – a legacy of the founder Sukarno’s fledgling years of totalitarian regime that was perpetuated by incumbent Suharto – and now Jokowi.
Tourism, contrary to the impression of a slump, has logged northward shift in the last two years since 2013, divulge statistics. A total number of foreign tourist arrivals to Indonesia in 2014 stood at 9.44 million, up 7.19 per cent from the preceding year, says Indonesian Investment. But the economy does not reflect the bounties wrought by the high tourist inflow — despite the fact that weakened “rupiah” against the dollar draw more foreign tourists, who find the destination cost-effective.
If media projections are to be lent credence, the export market has hit a new high with large shipments to China. The country claims that it ranks 16th among the G-20 nations, but “performs badly in business deals, competitiveness and personal per capita income”.
The country’s paradoxes result from poor political will to set the balance right — and from the fact that ASEAN has yet to evolve as a powerful economic community like the European Union with a common currency and provisions for neighbourly charities to bail out weak economies. Religion adds to the despondency with schisms between the Muslims, Christians and Buddhists becoming perceptible in the last decade with protests and allegations of persecutions of religious sects. The country is run by a network of powerful business conglomerates, who rinse the economy to “maximize” gains.
Add to this forlorn scenario, corruption — Indonesia’s bane since its transition to Independence from a European colony 70 years ago. “Money is in the hands of the ruling Sukarno and Suharto clans even now,” the journalist from Jakarta Post pointed out at a lavish dinner in “Vin+”— a fashionable night spot in the capital’s Senayan City Mall, frequented by the capital’s well-heeled. Jokowi has a complex assignment on hand— to put the currency back on track and tackle institutionalized corruption, she added on a lighter vein.
Corruption is endemic to every level of the society despite measures to check social “wrong-doings”. In 2003, the Indonesian government set up a special anti-corruption agency, Corruption Eradication Commission (KPK), despite the presence of the National Police and the Attorney General’s office— to try cases of graft. But the numbers of reported corruption overwhelm even the commission, whose performance has slowed down considerably.It calls for a change, is the refrain of the young Indonesians. Former KPK chairman Tauficqurachman Ruki was of the opinion that “successful eradication of corruption in the country rested on strong and lasting commitment from the President and the chief justice.”
“One way to achieve the target (eradicating corruption)is through a thorough review of the political system— the party, state administration and the election system – the legal and the economic system. But the key remains the availability of strong and committed state leaders to lead and guide the process,” Ruki said.
Jokowi’s ministerial reshuffle is definitely an effort — or at best a semblance of positive engagement with the pressing economic and social concerns that Indonesia is battling at the moment.

—Madhusree Chatterjee
Senior Editor/The Statesman/Asia News Network

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