Indonesia has come a long way since Oct. 20, when Joko Widodo was sworn in as president. Unfortunately, the distance the country has traveled has been in the wrong direction. Expectations were that Widodo, known as Jokowi, would accelerate the reforms of predecessor Susilo Bambang Yudhoyono — upgrading infrastructure, reducing red tape, curbing corruption. Who better to do so than Indonesia’s first leader independent of dynastic families and the military?
In 10 years at the helm, Yudhoyono dragged the economy from failed-state candidate to investment-grade growth star. Jokowi’s mandate was to take Indonesia to the next level, honing its global competitiveness, creating new jobs, preparing one of the world’s youngest workforces to thrive and combating the remnants of the powerful political machine built by Suharto, the dictator deposed in 1998. After 291 days, however, Jokowi seems no match for an Indonesian establishment bent on protecting the status quo.
Growth was just 4.67 percent in the second quarter, the slowest pace in six years. What’s more, a recent MasterCard survey detected an “extreme deterioration” in consumer sentiment, which had plummeted to the worst levels in Asia. Investors are already voting with their feet. The Jakarta Composite Index has fallen 13 percent from its April 7 record high, one of Asia’s biggest plunges in that time. And foreign direct investment underwhelmed last quarter, coming in at $7.4 billion, little changed from a year earlier in dollar terms.