Photo courtesy ANU Indonesia Project on Facebook

Photo courtesy ANU Indonesia Project on Facebook

Indonesia experts from around the world met in Canberra over the weekend for the Australian National University’s 31st annual Indonesia Update conference.

The theme of the 2013 Update was ‘Regional Dynamics in a Decentralised Indonesia’, and speakers from academia, NGOs and government addressed how Indonesia’s process of decentralisation has influenced its political and economic life. AIYA was at the conference, and while such a brief summary can’t do justice to the variety and depth of presentations made, this post will try to sum up the highlights of the research presented therein.

Political Update

From the moment the Lowy Institute’s Indonesia analyst Dave McRae (@_DaveMcRae_) began the conference’s traditional opening political update, it was clear that one figure was going to dominate discussions of the country’s political outlook: Joko Widodo.

Dr McRae explained that until recently, observers were expecting that the 2014 presidential elections would be a rather boring affair, in which an uninspiring member of the existing Jakarta elite would be anointed by an correspondingly unenthusiastic electorate. Or, alternatively, that the controversial former general Prabowo Subianto would ride to office on the back of his pro-poor rhetoric and throwback nationalist appeal.

Jokowi has changed all this. The former Surakarta mayor became an underdog candidate in the 2012 gubernatorial election in Jakarta—in which he vanquished the incumbent governor, a machine politician extraordinaire with the backing of the bulk of the Jakarta elite—in a campaign that made the most of his down-to-earth persona and pro-poor policies.

As Dr McRae put it, the question before Jokowimentum got going was whether a new president would tacitly endorse, or actively encourage, what many see as a democratic stagnation—or even democratic regression—in Indonesia. Now, we are asking a completely different question: can a relative outsider like Joko Widodo use a popular mandate to force through to drive badly-needed reforms? Whatever the answer, the fact that the latter rather than the former question is now being asked most often is a welcome development, and one for which we have Jokowi to thank.

Economic Update

Top of the economic news was Indonesia’s relationship to the emerging-market anxiety that had accompanied expectations that the US Federal Reserve would wind down its monetary stimulus. Treasury’s Jason Allford explained that while ephemeral shocks like the ‘taper terror’ come and go, the fundamentals of the Indonesian economy appear to be strong. (Though the ANU’s Hal Hill, in a subsequent Q&A session, recalled that at the September 1997 Indonesia Update, attendees nodded at similar reassurances of the ‘fundamental strength’ of the Indonesian economy).

Moekti Soejachmoen of USAID reviewed the Indonesian government’s policy responses to the ‘taper terror’, arguing that though they were reactive, short-term and piecemeal, they were probably the best that could have been achieved given Indonesia’s current political climate. Allford articulated a key issue about Indonesia’s responses to any future shocks: Indonesia, he said, needs to have economic policies and institutions ‘that are robust to a variety of different [financial market] eventualities’.

The panel also looked ahead to the 2014 implementation of universal health insurance in Indonesia, asking whether the scheme would be adequately funded and highlighting the critical importance of good governance and administration in ensuring that the policy achieves its objectives.

Assessing decentralisation—highlights

The University of London’s Anne Booth and the ANU’s Marcus Mietzner put Indonesian decentralisation in its historical context. Professor Booth explained that throughout Indonesian history, tensions between the centre and regions were always at the heart of national political dynamics. The notable exception was during the New Order, when the overwhelming power of the Jakarta-based regime saw regional autonomy and identity largely suppressed.

Dr Mietzner discussed the impact of the post-Soeharto decentralisation process, arguing that while it has largely not led to the more accountable and responsible government which decentralisation ostensibly promotes, its goal of preempting separatism—by allowing for expression of local cultural and political identity within the context of a coherent Indonesian state—has succeeded. Dr Mietzner argued that thanks to the reforms, centre-periphery relations in Indonesia are actually more stable now than they have ever been.

The ANU’s Hall Hill and University of Canberra’s Yogi Vidyattama crunched the numbers on economic growth and regional inequality in Indonesia. The data showed that despite some prominent interregional disparities in terms of growth and poverty rates, the geographical distribution of inequality has remained relatively stable since the 1970s: natural resource-rich regions and big cities, unsurprisingly, outperform the rest. The real problem is Papua and, to a lesser extent, Maluku: not only are these regions much poorer than the rest of Indonesia, but data show that they’re actually going backwards.

Aceh and Papua still represent what the conference billed as ‘Challenges in the Periphery’. Sidney Jones and Cillian Nolan of the Institute for Policy Analysis of Conflict gave a terrific presentation which explained how regional autonomy and pemekaran (blossoming/proliferation) of local jurisdictions have exacerbated intra-elite and inter-clan conflicts within Papua, which in turn has made the task of the central government in addressing security and economic challenges in Papua all the harder.

The ANU’s Ed Aspinall spoke about the situation in Aceh, where the post-2005 peace agreement with the Gerakan Aceh Merdeka (GAM; Free Aceh Movement) has seen the former rebels morph into a formidable predatory political machine in the form of Partai Aceh (the Aceh Party), which dominates local politics in the province. Indeed, Professor Aspinall argued, the ability of Partai Aceh to illicitly access state resources has kept any latent separatist sentiments under control. Nevertheless, he and other observers remain worried about the sustainability of this flawed stalemate between peace and good governance.

Peter McCawley of the ANU gave a striking presentation on Indonesia’s infrastructure crisis, and just how much the deficit of transport and logistical links in particular are holding back Indonesia’s economic potential. The bare facts are staggering: it is estimated that 40 per cent of the logistics cost of getting cattle from  Sumbawa to Jakarta is taken up just by getting the cattle from the feedlot to the nearest port, such is the quality of transport infrastructure in disadvantaged regions. It is cheaper to ship goods from Java to China than to Kalimantan, and vice versa—which is, of course, why it is cheaper in Jakarta supermarkets to buy fruit shipped from China in than fruit trucked from elsewhere in Indonesia. Trucking an equivalent amount of goods in Indonesia costs double what it does in Malaysia. The list goes on. It is this infrastructure deficit, Dr McCawley says, which has seen Indonesia ‘miss the boat’ on the integration into the international logistics systems which would have helped its presently underdeveloped manufacturing sector thrive.

The Indonesia Update conference papers are published as an edited volume roughly six months after every conference, so look out for the book based on this year’s Update in April.


That’s our wrap of the highlights of this year’s conference. It was announced that the theme for 2014’s Update, scheduled to he held just before the new Indonesian president’s inauguration, will be a retrospective on the SBY decade. As convenor Dr Dirk Tomsa of La Trobe University said, it will delve into ‘President Yudhoyono’s achievements and shortcomings’ and reflect on what his presidency has meant for Indonesia. See you there!