The 100-day challenge for the Susilo administration

The 100-day challenge for the Susilo administration

David E. Sumual, Jakarta

The election process that began in March culminated in a
peaceful presidential runoff election on Monday. In the short
term, this peaceful political event could be seen as a good start
for a more sustainable push toward an era of higher economic
growth.

This expectation is reasonable since the next government will
inherit an economy that is already rolling, supported by 14
months of low inflation and interest rates as well as relative
stability in the exchange rate.

Given the pervasive corruption and sluggish economic progress,
the majority of Indonesians have actually been longing for the
powerful mantra of "change". This may partly explain why
incumbent President Megawati Soekarnoputri could not retain her
hold on power.

However, as a watchword, change is risky if the public's high
expectations of better times cannot be met. These high hopes in
the new government could take a backward turn into another round
of political and economic instability if the new administration
cannot manage these expectations. As such, the first 100 days
will not be a honeymoon period for Susilo Bambang Yudhoyono's
presidency.

In contrast, people and markets will wait for further details
of his policies, especially economic policies that are still
little-known so far. As a clue, an articulate presentation of his
vision on underlying critical policy issues and possible
solutions for strategic challenges would be the key to winning
public and market confidence in the first 100 days.

The drafting of his cabinet will be an early signpost of how
Susilo's administration will conduct his policies. Certainly,
Susilo should demonstrate a clear reliance on meritocracy in
selecting his cabinet rather than choosing a partisan one.

By selecting cabinet members that have professionalism,
capacity and good track records, Susilo will send a signal to the
public of his commitment to change. As such, his choices for the
attorney general and economic ministers will be the litmus test
of how serious he is in enforcing the law, combating corruption
and reinvigorating the economy.

An immediate challenge facing the new government is the risk
of political-economic instability due to upcoming day-to-day
matters. This includes the government's readiness to address
problems relating to the upcoming holiday seasons, budget issues
and the massive repatriation of illegal migrants from Malaysia.

With crude oil prices hovering above US$40/barrel for almost
four months, Indonesia's economy and particularly the
government's finances will surely face a significant risk.
Susilo's government may thus not have any alternative but to cut
the fuel price subsidies that now reach costs of around $8
billion annually.

Another problem awaiting the new government is the delayed
massive deportation of around 700,000 illegal migrant workers
from Malaysia by January 2005. It would of course be a time bomb
if Susilo's government did not have clear and elaborate plans to
address this problem.

The next major challenge is the possibility of political
turbulence, as Susilo may become a president without
parliamentary support due to his lack of a solid legislative base
in the House of Representatives.

On several occasions, the nationhood coalition, led by Golkar
leader Akbar Tandjung has vowed to become a permanent opposition
force in the parliament if Megawati loses in the election runoff.
However, there is also indeed a possibility that this coalition
will break apart due to power struggles led by the pro-Susilo
lobby within Golkar. Given this situation, the next government
may look at what Argentine President Nestor Kirchner and Mexico
president Vicente Fox did when they took office with shaky
support from parliament.

Both these presidents succeeded during their first 100 days by
undertaking bold and far-reaching strategic actions to fulfill
their campaign promises. Learning from both presidents, Susilo
could use his strong charismatic leadership and communication
skills by using the media as a catalyst to present himself as a
man fighting against corruption and having the urgency to revive
the national economy.

Efforts to stamp out corruption, illegal logging and
smuggling, for instance, by investigating a list of high-profile
suspects would certainly have wider public support. With such a
move, the positive endorsement of public opinion and even from
political members of the non-Susilo-camp could be expected.

Although the Susilo administration may successfully navigate
the course of domestic politics in the first 100 days, long-term
investors could still stay on the sidelines, waiting for
developments in legal reforms and security. As such, it would be
a big plus for Susilo if in the first 100 days, his
administration could demonstrate strong commitment to legal
certainty by abiding and enforcing contracts. It would also be a
positive move if his government could cut back the many
bureaucratic procedures relating to investment that weigh on the
country's competitiveness.

Moreover, combating terrorism and dealing with separatist
movements should also have a sharper focus in order to change the
security risk perception among most foreign investors. After the
recent terrorist bombing that targeted the Australian Embassy,
the next government must intensify its efforts to do battle with
the terrorists.

Formally banning Jamaah Islamiyah and publicly declaring war
on militants may restore domestic and international confidence
about domestic security.

By taking bold moves to destroy terrorism, the public and
investors will see the government is acting to protect their
security and investments. Thus, the public relations skills to
deal with perception and sentiment will be badly needed by the
incoming administration.

By addressing these main challenges in the first 100 days of
its administration, Susilo's government can hopefully attract the
long-awaited investment necessary to help around 40 million
Indonesians who are currently either unemployed or under-
employed.

People and particularly businessmen have high hopes that the
rules of the game will change as they await any signposts of
action programs in the first 100 days of the new administration.

If the Susilo-Kalla pairing is incapable of strongly
asserting leadership and commitment to change in the first 100
days, skepticism may start to grow again, which would not bode
well for the country's outlook.

The writer is an analyst at the Danareksa Research Institute.
This article is his personal view.