Indonesian President Joko Widodo will meet U.S. President Barack Obama on Monday in his first official visit to the United
\nStates since assuming office last October. Domestic reviews of Mr. Widodo\u2019s performance are mostly negative due to deteriorating
\neconomic fundamentals. But the president\u2019s tenure has exceeded expectations in other ways, and he is undertaking economic
\nreforms that could help restart growth. As a potentially transformational leader, he deserves U.S. engagement and support.<\/p>\n
Over the past year, the Indonesian economy has grown at its slowest pace since 2002. The rupiah lost more than 11% of its value,
\ntrading at its lowest level since the Asian financial crisis of the late 1990s. The Jakarta Composite Index is down more than 7%.<\/p>\n
Slowing growth in China, a prolonged commodities slump and weak overall external demand have hurt Indonesia. But the country\u2019s
\nproblems are not just a function of external headwinds. The administration disappointed early on with a proliferation of
\nself-defeating protectionist measures, continuing a trend of narrow nationalism under way since the previous administration.<\/p>\n
Some policies, such as bans on certain food imports and the imposition of local-language requirements on expats, were so clearly
\ncounterproductive that they were quickly walked back. But the policy flip-flops created an air of dysfunction exacerbated by
\nopen conflict within the ruling coalition. Meanwhile, contract disputes continue to plague Indonesia\u2019s natural-resource sector.
\nIt\u2019s no wonder foreign direct investment has slowed.<\/p>\n
So it would seem that there is little to celebrate as Mr. Widodo comes to Washington. But that perception is resoundingly wrong.<\/p>\n
For starters, the democratically elected president is still in office, and the nation with the world\u2019s largest Muslim population
\nis at peace. This was all in doubt when Mr. Widodo narrowly won the most bitterly contested election in Indonesian history.<\/p>\n
The president\u2019s opponent, a former special-forces commander accused of human-rights abuses, refused to accept the results until
\nthe courts ruled in favor of Mr. Widodo. Bloodshed was averted, but the newly elected president still faced an opposition
\njuggernaut in the legislature, with hostile parties controlling 63% of the seats. The prospects for Mr. Widodo\u2019s legislative
\nagenda looked bleak.<\/p>\n
Through a combination of good luck and deft maneuvering, Mr. Widodo lured opposition legislators both formally and informally to
\nhis camp. Within a matter of months, the coalition aligned against him had all but collapsed, enabling the president to pass
\ncritical pieces of reform. That included the restoration of direct elections for local government posts, which were
\ncontroversially rolled back in the waning days of the previous president.<\/p>\n
Mr. Widodo\u2019s consolidation of legislative power also enabled the passage of a revised state budget, in which the president
\nimplemented his campaign pledge to dramatically cut fuel subsidies. During the prior 10 years, those subsidies accounted for
\nmore than 12% of government spending. This ballooned to almost 14% in the budget handed to the president by his predecessor. Mr.
\nWidodo slashed that number to about 3%, enabling a reallocation of resources into more productive areas of the economy, the
\nfirst and foremost being infrastructure development.<\/p>\n
In addition to expanding the budgets for public works and transportation, Mr. Widodo made an unprecedented capital injection
\ninto state-owned enterprises, more than 70% of which was allocated for infrastructure projects. He then sought and received $50
\nbillion in infrastructure loans from China.<\/p>\n
The importance of the president\u2019s focus on infrastructure can hardly be overstated. For years, the Asian Development Bank,
\nInternational Monetary Fund and World Bank have cited Indonesia\u2019s poor infrastructure and resulting high logistics costs as the
\nmain reasons for Indonesia\u2019s lack of competitiveness in manufacturing.<\/p>\n
Pleas for higher infrastructure spending fell on deaf ears during the commodities boom, when natural resources drove years of
\neconomic expansion. The end of the commodities cycle laid bare the costs of complacency, as the current account swung into
\ndeficit and the rupiah suffered steep declines.<\/p>\n
Mr. Widodo\u2019s big infrastructure bet aims to reduce dependency on commodities exports. He has rolled out ambitious plans for the
\nbuilding of roads, ports and power plants. While the hard work of implementation lies ahead, dozens of state-funded projects
\nhave already broken ground.<\/p>\n
Mr. Widodo has also started to overhaul Indonesia\u2019s education system to better prepare students for the jobs of the future. He
\nhas provided more resources to vocational programs and put greater emphasis on information technology. The president will bring
\nthis message to Silicon Valley on Wednesday, where he will seek to drum up investment from the likes of Apple, Facebook and Google.<\/p>\n
That will require sustained efforts to improve Indonesia\u2019s investment climate. To that end, President Widodo reshuffled his
\ncabinet in September, placing seasoned technocrats in important economic posts. Since then the team has rolled out five economic
\nstimulus packages, aimed at cutting red tape and facilitating investment and exports. It has also taken an initial step to
\ntackle the politically sensitive problem of labor reform.<\/p>\n
While these reforms don\u2019t go far enough, they signal an awareness of the urgent need for pro-market policies. If Mr. Widodo
\ndelivers on even a portion of his infrastructure promises and continues to deregulate Indonesia\u2019s economy and provide greater
\nlegal certainty, he has a real shot at transforming the world\u2019s third-largest democracy into the economic powerhouse it should be.<\/p>\n
Ms. Brooks is adjunct senior fellow for Asia at the Council on Foreign Relations.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/exceeding-expectations-in-indonesia", "image": "jokowidodo.jpg" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }