‘Quick Learner’ Jokowi Building Momentum After Slow Start

  • Two years in office marked by focus on economy, infrastructure
  • Main acheivements include tax amnesty, reforming fuel subsidy

After a shaky start, Indonesia’s leader Joko Widodo has put Southeast Asia’s largest economy -- and his presidency -- back on track.

Two years into the job, Jokowi, as he is better known, has managed to assert his authority over Indonesia’s political establishment, cut fuel subsidies and boost revenue with a tax amnesty program. Still, serious challenges remain: He must implement an ambitious infrastructure program, reduce corruption and hit a 7 percent growth target by 2019.

For a wrap on how Jokowi saw things at the beginning of his term, click here

A self-made furniture maker and relative political outsider, Jokowi, 55, inherited an economy slowing as global commodity prices slumped. Urgent infrastructure challenges -- including congested transport networks and inefficient ports -- also presented obstacles as he consolidated power.

President Joko Widodo is sworn in on Oct. 20, 2014.

Photographer: Oscar Siagian/Getty Images

“After a slow start for most of his first year in office I think he has established his political standing," said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore. “As a result of that, he’s been able to focus on trying to get the reform momentum going."

Here is a look at some of key accomplishments and challenges.

Parliamentary Strength

Following a narrow election victory, Jokowi faced a parliament dominated by opposition parties. His supporters held 38 percent of seats in the 560-member lower house, and his own Indonesian Democratic Party of Struggle, or PDI-P, was beset by internal power struggles.

With a combination of patronage and political savvy, Jokowi bolstered his coalition over his first 12 months, turning a major weakness into a strength. He now controls 69 percent of seats in parliament.

“A quick learner and avid student of politics," Achmad Sukarsono, Indonesia analyst at Eurasia Group in London, said of Jokowi. “That doesn’t mean that he has reached a point where he can command and control the political elites yet, but at least we have seen a strengthening of his political clout."

Fuel, Tax

Within his first three months, Jokowi reformed Indonesia’s decades-old fuel subsidy system. He cut 276 trillion rupiah ($21.1 billion), around 12 percent of spending, from the 2015 budget.

In June, Jokowi pushed a controversial tax amnesty bill through parliament. Scheduled to run through March 2017, the program has so far brought in revenue of 97.6 trillion rupiah ($7.5 billion), about 60 percent of the government’s target. Penalties increased this month, which will slow the amount of declarations from here on.

A protest in Central Java to denounce the planned increase of fuel prices in Nov. 2014.

Photographer: Agoes Rudianto/NurPhoto via Getty Images

Growth, Discipline

Jokowi’s goal of 7 percent economic growth by 2019 is looking difficult. Forecasts compiled by Bloomberg show the economy expanding 5 percent this year, 5.3 percent in 2017 and 5.6 percent in 2018.

Still, the recent return of World Bank managing director Sri Mulyani Indrawati as finance minister reinforced views that Jokowi is committed to fiscal discipline. International investors have responded positively: Indonesia’s stocks and currency are both among Asia’s best performers this year.

Asked in an interview at the Washington headquarters of the World Bank earlier this month whether she was confident that Jokowi’s reform agenda was on track, Indrawati said "so far I think that’s what I see."

Red Tape

After promising to cut red tape, Jokowi faced early criticism when his government issued protectionist regulations and made it harder for foreign professionals to get work permits.

Since then, shorter times to register a business and better access to credit helped Indonesia slightly lift its ranking on the World Bank’s Ease of Doing Business index to 109 out of 189 countries. Still, that’s far from Jokowi’s target of reaching the 40s by the end of his first term.

Infrastructure

Joko Widodo inspects a toll road project in Sumatra in Feb. 2016.

Photographer: Dimas Ardian/Bloomberg

Jokowi has made infrastructure a hallmark of his presidency. After initially struggling to get major projects off the ground, this year a third terminal was opened at Jakarta’s Soekarno–Hatta International Airport and he accelerated construction on a $1.3 billion metro rail system in the capital.

Other projects underway include the Trans Java toll network, which will provide uninterrupted toll-road across the country’s main island, and a $5.5 billion high-speed railway linking the capital to Indonesia’s West Java province.

One of Jokowi’s top achievements has been “greatly increasing expenditure on infrastructure," said Dave McRae, a senior research fellow with the Asia Institute at the University of Melbourne. "Less clear is whether his government will consistently be able to raise the revenue to fund infrastructure development."

— With assistance by Nasreen Seria

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