Indonesia's Widodo Faces Mounting Pressure over Economic Performance

May 11, 2015Indonesiaby EW News Desk Team


When he took office as President of Indonesia, Joko Widodo vowed to lift the largest economy in Southeast Asia to 7 percent average annual growth during his five-year term. However, since taking office in October, the economy has actually slumped and contracted, showing growth of only 4.7 percent in the first quarter of 2015. Thus, in the first week of May 2015, Widodo summoned his economic ministers to discuss the situation. To his surprise, his ministers were not the only ones to arrive.

According to a report by Reuters, members of Widodo's own party dropped in for the meeting to express their own concerns over Widodo's performance. The slump, largely blamed on incompetence in Widodo's administration, has left the former furniture salesman looking foolish and ineffective in the eyes of the public and political party members alike.

Slow Spending, Poor Commodities Market to Blame

Although Widodo did take advantage of the slump in oil prices by scrapping government subsidy programs, saving about $20 billion, the government has been slow to reallocate these funds to stimulate growth. A number of infrastructure improvements, seen by many analysts as critical to expanding the economy, remain unfunded and bogged down in bureaucratic red tape. In fact, as of April 25, the government had only spent 2 percent of its annual infrastructure budget.

The lack of spending is really just exacerbating more deeply ingrained hurdles to Indonesia's expansion. A slump in commodity investments has done its part to damage the resource-rich nation's economy, as well. Unfortunately, just as with the slow spending problems, government officials have done little to address this issue, such as subsidizing these industries or attracting new investors.

Critics Blame Bureaucrats, Call for Reshuffle

These concerns over the government's ineffectiveness have led many in Indonesia's political structure to call for a restructuring of Widodo's cabinet and bureaucracy. Many feel that the government is filled with politicians rather than experienced technocrats able to identify the government's needs, set goals, and implement programs to achieve those aims. Instead, backbiting, ineptitude, and personal fiefdoms over certain departments have led to out of control inefficiency. Nevertheless, Widodo's spokespeople indicate that he is generally happy with the functioning of his administration, though he agrees some adjustments may be necessary in order to achieve his campaign promises.

Political analysts agree that a change is in order, but fear that it could be too little too late. Appointment and confirmation of new personnel could stall in the political process, further delaying reforms. Moreover, political pressures could force Widodo, the first Indonesian president from outside the political or military establishment, to include more PDI-P in a new cabinet, watering his influence significantly.

Widodo supporters, on the other hand, suggest that the battle is far from over and attribute the downturn in growth to a learning curve rather than an insurmountable obstacle or failure of leadership. They point out that replacing the current staff could simply lead to newly inexperienced bureaucrats repeating the same errors as their predecessors. Thus, they counsel staying the course with minor adjustments to see if the economy rights itself with the passage of time and acquisition of experience.

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