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Indonesia’s Valentine’s Day vote

PRANANTA HAROUN-UNSPLASH

On Feb. 14, Indonesians will vote in parliamentary and presidential elections in what is likely to be the country’s most consequential elections since the fall of Suharto in 1998. Indonesia is Southeast Asia’s largest country by population, area and economic output. It is among the top global exporters of thermal coal, processed nickel, copper, bauxite, and palm oil, among others. Indonesia supplies almost all of the coal for Philippine power plants, while its mineral export policies affect our own nickel and copper sectors. Indonesia is also one of the largest consumers of rice, and occasionally imports from Vietnam and Thailand in competition with the Philippines.

Indonesia is also a regional political leader. The Bandung conference held in West Java in 1955 eventually became the basis for the Non-Aligned Movement that was formed in the early years of the Cold War, and which became the single largest grouping of countries outside the nuclear superpowers. Until today Jakarta continues to have a strong voice across many regional foreign policy issues, from ASEAN cooperation to the region’s stand on the many crises in the Middle East to the return of democracy in Myanmar.

Politically and socially, if the Philippines wanted to find a country today that faces many of the same challenges and seemingly unfulfilled potential, none in Asia comes closer than Indonesia, as it faces many of the same challenges. Its institutions are weak, and corruption is a pervasive problem that has discouraged foreign investors and destroyed economic value, with the most visible effect being Indonesia’s decline as an oil and gas exporter. Patronage politics is rife. Deforestation, land rights disputes, and plastic waste in the rivers are common environmental and social problems. The moniker “land of broken investor promises” could be applied as much to the Philippines as to Indonesia.

The country is also attempting to move a large part of its population out of agriculture into the manufacturing and service industries, with a particular emphasis now on manufacturing for renewable energy, batteries, and autos. And like us, many of its citizens work abroad as ours do — on cargo and cruise ships, as caregivers in Singapore and Hong Kong, and in the service sectors in the Middle East. Like us, its overseas workers give hope to their families, and it is similarly concerned with how to protect its own OFWs from maltreatment, abuse, and war. And Indonesia’s creation of its own sovereign wealth fund, the Indonesia Investment Authority, was one of the models for the Maharlika Investment Fund.

Therefore, what happens to Indonesia as a country not only affects the Philippines through trade and commerce but makes for an interesting mirror for our country and could provide additional context for what we are trying to do to lift our country to the next stage of development. Its industrialization mistakes today could serve as lessons for us.

The vote next week is therefore more than a passing interest. What makes it especially consequential is that the leading candidate is a retired general with a checkered human rights history, who occasionally voices his impatience for democratic politics and has, through three election campaigns, railed against foreign investor participation in the economy.

THE PERSONALITIES INVOLVEDIndonesian presidents are limited to two terms, which makes President Joko Widodo ineligible to run again, having won in 2014 and 2019. Should none of the three candidates win a majority next week, a runoff between the top two vote-getters will be held in June.

Leading the race is the country’s defense minister, Prabowo Subianto, a retired general who spent most of his career in Indonesia’s special forces command, Kopassus, during the Suharto era. Prabowo is estimated to have around 46%-48% voter support, which puts him within range of winning it all next week. Trailing him are the former governor of Jakarta, Anies Baswedan (with roughly 26%-27%), who is running as an independent, and the former governor of Central Java province, Ganjar Pranowo (with 20%-21%), who belongs to the Indonesian Democratic Struggle Party (PDI-P) of Widodo. Should Prabowo fall short of a majority, he is still the strong favorite to defeat either of the two in June.

Curiously, Widodo supports Prabowo, not Ganjar of his own PDI-P party. Until early this year, Widodo had backed Ganjar, strongly lobbying PDI-P leader and former president Megawati Sukarnoputri to select him as the party nominee. Megawati preferred that her daughter, Puan Maharani, be PDI-P’s presidential candidate. But Puan was not popular and Widodo eventually prevailed.

However, while Widodo was lobbying Megawati to choose Ganjar, his inner circle was apparently also considering that their political future might be better served by siding with Prabowo. Ganjar was a PDI-P loyalist after all, assuring that Megawati would have a strong, if not dominant, voice in a Ganjar administration. Meanwhile, Prabowo was also open to an alliance with the popular Widodo, due to the electoral boost that it would give. Eventually, Gibran Rakabuming Raka, Widodo’s son and Solo city mayor, became Prabowo’s vice-presidential running mate. Widodo has not openly endorsed Prabowo yet, but his support for the defense minister is the worst-kept secret in all of Indonesia.

WHY THIS VOTE MATTERSForeign investors are hoping that Widodo’s influence in what is likely to be a Prabowo government and the fragmented nature of Indonesia’s politics make it unlikely that there will be a major shift in policy, and that continuity will largely prevail, from the shift of the capital to Nusantara to the development of domestic manufacturing sectors. What gives them hope is that Prabowo has proven to be a team player in the Widodo cabinet and a largely uncontroversial defense minister since 2019.

But Prabowo has another side. He admitted to having played a role as head of the strategic forces (Kostrad) in the abduction and torture of pro-democracy activists during the last days of the Suharto regime, with at least a dozen of those taken still missing. He has also been accused of leading violent crackdowns in what was then East Timor while he was in the special forces. But Prabowo puts this as being in the context of him as a soldier in the autocratic Suharto regime.

It is Prabowo’s combination with Widodo that makes some local political analysts uncomfortable, because Widodo has shown a willingness to also disregard democratic guardrails, as could be seen indirectly in his lieutenants’ efforts over the past year to take over the Democrat Party, a half-hearted attempt to postpone the elections or to let his son Gibran run as VP despite the fact that the Constitutional Court decision that lowered the age for vice-presidential candidates (and which directly benefited Gibran) was decided while Widodo’s brother-in-law was chief justice. An ethics panel later removed him from the chief justice post. Widodo oversaw the passage of a law in 2019 that weakened the Anti-Corruption Commission.

As presidential candidate in 2014, 2019, and 2024, Prabowo has railed against foreign investor participation in the economy; he believes that foreigners have extracted much of the wealth in the economy, with benefits only trickling down to the citizens. He described Indonesians partnering with foreign investors as “lackeys” and “puppets,” while ordinary Indonesians become employees who only get “small salaries.” Recently, he said that “a neoliberal economy cares only about profit and… we cannot be like that.”

Regardless of Prabowo’s framing, if his administration adopts more nationalist policies and is successful in advancing Indonesian industry forward in the short-term, then this could add to the clamor in other countries such as the Philippines to adopt industrial policy and for the government to intervene more in the economy and to have national champions.

But it could also lead to a turn away from broader party-based politics and the democratic institutions such as the anti-corruption agency KPK that had been seemingly strengthened after the fall of Suharto — a backsliding that warns that democracy’s move forward should never be taken for granted.

Widodo has gained international recognition for how far forward he has brought Indonesia’s economy, including the development of Morowali for its nickel industry and the construction of Southeast Asia’s first high-speed rail service. But the country and its people deserve a deeper look because its political and economic evolution could also serve as both cautionary tale and model for the Philippines.

Bob Herrera-Lim is a managing director at Teneo, a New York-based consulting firm that advises companies and investors globally. He covers all of Southeast Asia for the firm’s clients. He is also a fellow of the Foundation for Economic Freedom.

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