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.