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SBY Reenergizes the Indonesian Giant
In the three years since he took office, Indonesian President Susilo Bambang Yudhoyono, SBY to his fellow countrymen, has stabilized the archipelago and turned round the nation’s economy. H.E. Arizal Effendi, the Ambassador of Indonesia to France, talks about reforms launched and advances made in the first half of SBY’s tenure, from the Aceh peace agreement to the rise in foreign investment.
The Diplomatic Letter: Mr. Ambassador, In September 2004, Susilo Bambang Yudhoyono became the first Indonesian president elected by direct universal suffrage, culminating your country’s successful transition to democracy. Eight years after President Soeharto stepped down, could you describe the hopes raised by this brand-new era? What work remains to be done for this democracy to be sustainable in the future, notably in terms of decentralizing the power structure?
H.E. Arizal Effendi: The people of Indonesia elected President Yudhoyono with a very high expectation. Most and foremost they hoped for the president to stabilize Indonesian domestic politics and security and to reenergize the economy. The three are interrelated. Now, in the mid-term of his tenure, Indonesia’s political and security condition have been much stabilized. Internal armed conflict rarely happened. That is why according to one poll, the President’s popularity is still very high which is more than 60%.
In order for democracy to be sustainable in the future, Indonesia still has one important work to fulfill and that is to reenergize its economy in order to alleviate the issue of unemployment and to reduce poverty. The government of Indonesia is facing this problem with a policy known as the” triple track strategy”. They are “pro-growth, pro-poor and pro job”. In this strategy, the target of the economic growth is at 7%. When the president took office in 2004, the growth was at 5%. Last year it has risen to 6.2%. It is less still than expected, especially in term of reducing unemployment.
T.D.L.: The Indonesian government has sought to spur economic growth by boosting confidence among foreign investors. Can you tell us what is being done to improve the business climate in your country? Are specific measures being taken to fight corruption? What other economic sectors is the Indonesian government promoting to foreign investors, aside from infrastructures and bio-energy?
H.E.A.E.: There are various issues related to attract foreign investment to Indonesia. The business people, among others, complaints about the lack of legal certainty, and complicated local regulations, often times, contradicting decisions made by the central government. The latter is a new phenomenon due to the new devolution of power to the region. Labor condition and the need to expand the capacity of infrastructure are also being cited. Indonesia, therefore, has to answer these issues simultaneously.
Concerning legal certainty, there are two issues to be dealt with. The first is to reform laws and regulations; the second is to enhance the capacity and skill of its officials in the three branches of government, executive, legislative and judiciary.
This year, Indonesia has enacted a new law on investment. The new law answered many issues such as land regulation and the processing investment permit under-one-roof. The new law also stressed that the government is prohibited to nationalize any foreign company in Indonesia without an agreed compensation. On the issue of labor, the new law provides a clear mechanism on the settlement of dispute. Aside from those efforts to make investment attractive in Indonesia, the government also provides incentives, among others, tax packages, zero tariff for the importation of capital goods, as well as a risk-sharing in which the government promise to provide compensation on any losses incurred due to unexpected changes in government policy.
On the issue of bureaucracy, Indonesia sent its officials to study abroad. France is one country which has kindly provided the necessary training for Indonesian officials. The same policy is taken by Indonesia in its efforts to fight corruption. On the issue of laws and regulations, the government established the Commission to Eradicate Corruption, Governmental Team to Investigate Corruption, and a Center to combat money-laundering. Indonesian officials deemed to hold key positions are to report their incomes, savings and properties obtained before, during, and after their tenure. To enhance the capacity of the officials trusted to work in these` bodies, Indonesia also sent them to be trained abroad including in France.
On the economic sectors which are promoted by Indonesia, aside from infrastructure and bio-energy, are investment on automotive industry, agro industry, ecotourism, mining, manufacture, and property.
T.D.L.: Your government has put reducing poverty and unemployment at the heart of its new action plan. What is being done on practical level to make this goal a reality? Are specific steps being taken to develop the country’s poorest rural regions? Could you lay out the broad lines of the policy to reform the education system so that more children are able to attend school?
H.E.A.E.: The policy to tackle the problem of poverty and unemployment as described earlier is the “triple strategy” with an emphasis to empower small, medium, and micro entrepreneurs. These sectors employed more than 60% of Indonesian labor force. The economic sectors which are given incentives by the government in this regard is to revitalize the agriculture sector, fisheries and petty traders in the villages.
The implementation of the triple strategy has proven to benefit the most poorest regions in Indonesia. The FAO stated that Indonesia has experienced rapid improvement in reducing a number of food shortages and poverty.
The main policy to reform Indonesian education is to enlarge the opportunity for the population to participate in education. In this connection, the government has decided a 9-year compulsory education system, starting from the age of 7 up to 15. To finance the policy sustainably, an article is inserted in the Constitution requesting the government to provide fund equivalent to 20% of the state budget annually. This budget allocation includes scholarships for exceptional students at the senior high school and from less fortunate families, program to eradicate illiteracy, and extending program outside the formal educational institutions. Various vocational educations outside the school system that utilize existing facilities and institutions are also made available to create a “fast lane” producing skilled workers. The purpose is to empower the workers to create their own business and, thus, alleviating the unemployment issue.
T.D.L.: Located within the Pacific “Ring of Fire,” Indonesia is frequently rocked by earthquakes like the one that hit the island of Sumatra in March of this year, or the powerful tremor that set off the deadly tsunami in late 2004. Could you tell us about the steps your county has taken to prevent natural disasters of this kind? Is Indonesia involved in any regional or international earthquake cooperation programs?
H.E.A.E.: Earthquake disasters are natural events which no one can prevent. Thus, the emphasis of the policy taken is to limit the damage when the disaster struck. In this regard, the government exerted efforts to improve the people’s capacity to establish an early warning system for tsunamis, rapid deployment relief services to the disaster area and various programs of post rehabilitation to recover the people’s socio-economic condition. Capacity building programs are also made available through various training for the trainers. Simulation exercises are undertaken to increase people awareness and evacuation capacity in earthquake prone areas. The programs are being held both at the national level and in collaboration with regional and international agencies. Indonesia initiated the “Special ASEAN Leaders” Meeting on the Aftermath of Earthquake and Tsunami” on 6 January 2005 in Jakarta. The meeting galvanized the region’s commitment to develop regional “early warning system”.
The cooperation both at the bilateral, regional and international level have been excellent including bilateral cooperation. For example, on a bilateral basis, France provided numerous assistances through various regular trainings in 2005 and 2006. Several regional governments in France have also given direct assistance for immediate relief as well as aid for rebuilding schools and hospitals at the earthquake stricken areas.
T.D.L.: The avian flu has hit your country particularly hard. What is Indonesia’s view on sharing H5N1 virus samples with the international scientific community? How will the agreement signed this past February with the U.S. pharmaceutical group Baxter International benefit Indonesia?
H.E.A.E.: Indonesia holds a strong view that its cooperation on providing H5N1 virus sample to any international organization should not be misused for commercial purposes only. Most and foremost it should be used for the benefit of humankind, especially the poor people. Thus, Indonesia proposed a resolution to the World Health Assembly Resolution during its plenary session on 23 May 2007 in Geneva. The proposal was entitled “Pandemic Influenza Preparedness: Sharing of Influenza Viruses and Access to Vaccine and Other Benefits”. This resolution is to benefit the international community so that the vaccine derives from the cooperation would be accessible to the poor people.
In line with the above resolution, the Government of Indonesia has accepted to provide Baxter International with virus samples since it has agreed to sign the Material Transfer Agreement incorporating the principles laid in the said WHA resolution. Baxter has promised that it will provide technology transfer for vaccine production, helping developing countries such as Indonesia to produce the vaccine on their own in the future.
T.D.L.: More than one year after the signing of the August 2005 peace agreement between the Indonesian government and Aceh’s GAM separatists, the December 2006 elections made it possible to push forward with rebuilding the province devastated by the 2004 tsunami. How do you feel about this historic result, which put an end to thirty years of warfare? What kind of relations do the central and local governments have today?
H.E.A.E.: The result has been excellent. There is no more armed conflict in the province. The stability provides the Acehnese for the first time to conduct free and fair general elections to choose their governor and other regional leaders in the province. The EU participated in the election process by sending their observers to the area. Its assessment on the election is very positive.
Due to the laws and regulations on regional autonomy and general elections law, the people of Indonesia are free to choose directly their own leaders for their own regions. The elections and the laws on regional autonomy are strengthening the relations between the central and local governments. The reason is that the people perceived the devolution program as a sign of the central government’s sincereness to bring government services closer to the people and the determination to let the people participate in the development of the country through the so-called “bottom-up” approach.
T.D.L.: The former Indonesian province of Timor-Leste, which declared independence in 2002, elected its second president on 9 May 2007. What is your take on the grave economic and social crisis faced by this country since the April 2006 riots? Putting historical disputes between your two nations aside, how can Indonesia help to bring greater stability to Timor-Leste?
H.E.A.E.: Indonesian policy toward Timor Leste is to develop a robust friendly relation. The unfortunate social and economic shortages faced by Timor Leste is no different than those faced by any new or other least developed countries. Therefore, it is for Indonesia and those who are strong supporters of the UN MDGs to support the people of East Timor. Indonesia stands ready whenever asked by Timor Leste to extend its cooperation.
T.D.L.: President Susilo Bambang Yudhoyono has put a “new paradigm” at the heart of his political program, calling for the Indonesian Army to progressively and completely withdraw from all political activities. Can you tell our readers about the steps being taken in this direction?
H.E.A.E.: There are two issues in relation to the efforts in reforming the military. One is on the steps that are taken by the military itself, and the second is the enactment of a law separating the police from the military. On the first issue, it is important to note that the military voluntarily withdrew its representatives from the Parliament and prohibited its members to participate in the 2004 general election. The voluntary withdrawal is ahead from the actual plan to prohibit the military to engage in political activities by 2009. The withdrawal is a sign of the military determination to reform itself.
The second issue is on the law passed to separate the military and the police and assigned them with distinctively different responsibilities. The law entrusted the military only with issues in defending the country from foreign threat. Internal security is the responsibility of the police. By prohibiting the military to be involved in domestic security issues, the law also strengthened efforts to prevent the military to reengage itself indirectly in political activities.
T.DL.: While 87% of the population is Muslim, Indonesia is nonetheless a multi-confessional nation. How do you explain the implementation of certain Syariah regulation in a growing number of provinces? Given the rise in terrorist attacks, starting with the attacks in Bali in 2002 and in October 2005, has there been progress towards dismantling radical Islamist networks like Jamma Islamiya that threaten the archipelago? In addition to the joint anti-terror center opened in Bali, have you set up other cooperation mechanisms with your partners in the region, such as Australia?
H.E.A.E.: The implementation of certain syariah regulation is only to strengthen what has been prohibited by the criminal law such as prostitution. The people may also opt to implement syariah by submitting to the Religious Court issues on family affairs such as divorce and inheritance. On other public and private laws and regulations, it is the national law which prevails. Since the day of its independence, the Indonesian through democratic process rejected any notion to make Indonesia an Islamic state. The Indonesian believed that its democratic process must not turn into a “tyranny of the majority over the minority”. Indonesia is a pluralist country consisting of various ethnic and religious groups. Indonesia strongly holds to the belief that each and every Indonesian citizen should be given equal rights and obligations under the law.
Indonesia is determined to eliminate any terrorist groups. The overwhelming majority supported this policy. Indonesia has prosecuted and jailed a suspected leader of the Jemaah Islamiyah and recently it has also successfully captured the commander of the military wing of the banned organization. The jailing of the leaders and terrorists did not create any political instability in Indonesia. This served as an evidence that the people of Indonesia do not support their organization and their ideology. Those terrorist are only misusing Islam to garner support in Indonesia, but they have totally failed.
A recent survey by Indo Barometer and Wahid Institute indicated that a mere 2.1% of Indonesian Muslims said that terrorism is justified by religion. However, an overwhelming majority of 93.1% opposed that vice. Meanwhile, another survey showed that only 1.1% of Indonesian stated that religion allows the use of violence, while 96.4% of Indonesian rejected this vice.
At the regional cooperation, Indonesia and Australia launched an initiative in 2004 to co-host in Bali the Regional Ministerial Meeting on Acts against Terrorism. The meeting concluded by agreeing to a set of recommendations, in particular on the establishment of a working group of law enforcement officials and a working group on issues of regional law. It also supports the two countries to establish the Jakarta Center for Law Enforcement Cooperation (JCLEC) in the city of Semarang. The Center is doing well as a cooperation mechanism for information sharing and training.
T.D.L.: Faced with the growing power of the Chinese and Indian economies, the countries of ASEAN hope to push forward quickly to establish a common market. How can they reinforce regional cooperation and reduce the development gap between the organization’s member countries? As ASEAN celebrates the 40th anniversary of its creation, how do you feel about the Japanese proposal to create a 16-country free trade area in Asia?
H.E.A.E.: The cooperation between the ASEAN countries has been impressive. The organization has passed the ASEAN Free Trade Area (AFTA) agreement, launched an initiative called ASEAN+3 (China, Japan and Korea), and it has hold in Kuala Lumpur and the Philippines an East Asia Summit with the participation of Australia, India, and New Zealand.
Indonesia believed that through this cooperation, the region will be able to benefit economically and to lessen the current development gap. Indonesia is always open to consider any suggestion that may bring prosperity and stability to the region, including the Japanese proposal.
T.D.L.: President Susilo Bambang Yudhoyono’s strong diplomatic efforts have led to the signing of a strategic partnership agreement with China in April 2005, and to closer energy and military cooperation with Russia since November 2006. How would you describe the “strategic” interest your country holds for foreign partners, reconfirmed by President Bush’s visit to Indonesia in November 2006?
H.E.A.E.: On this issue, I can be brief. Indonesia currently enjoys excellent relationship with China, Russia, and the United states. The three countries are advanced technology and know-how countries as well as important trade and economic partners. Indonesia has benefited from these excellent relations. The current increase in government official contacts as well as people to people contacts has created a better and mutual understanding in efforts to further strengthen the relations. This trend is important to be continued.
T.D.L.: Indonesia has been elected to serve as a non-permanent member of the UN Security Council for 2007-2008. What is its main priority in this international body? After participating in the United Nations Interim Force in Lebanon (UNIFL), what does your country plan to do now to help rekindle the Middle East peace process? When the Iranian president visited Jakarta in May 2006, Indonesia offered to mediate with the West over Iran’s nuclear program. What do you think must be done to resolve the showdown between the international community and Iran?
H.E.A.E.: Indonesia’s priority is to place the UN at a central role to promote peace and stability in the world. Indonesian Constitution entask the government to contribute in efforts to establish a just and lasting peace in the world. Indonesian participation in the UNIFIL is to extend that contribution hoping that our brothers and sisters now living in the instable part of the Middle East can enjoy a lasting peace in the immediate future. It is Indonesia’s constitutional duty to do so.
On the issues of Iran, Indonesia supports the right of any party to the NPT to acquire nuclear technology for peaceful purposes. At the same time, any party wishing to uphold its right should abide by the condition as set out in the treaty itself, in particular concerning safeguard. The IAEA should be given priority to implement its safeguard activities without any outside influence. Indonesia hopes that the issue will be settled through peaceful manner where all parties abide by the rules and regulations as spelled out in the NPT. Confidence building measures between the parties in the dispute can be of significant help.
T.D.L.: In light of President Susilo Bambang Yudhoyono’s recent visit to Pyong Yang, and his willingness to help mediate over North Korea’s nuclear program, how do you feel about the breakdown of negotiations in February? How can Indonesia help bring North Korea back into the community of nations?
H.E.A.E.: All negotiations has their up and down period. One must not judge a negotiation by capturing a certain moment in the process. The most important thing is to build confidence building measures for the negotiation to continue.
Indonesia has excellent relations with both countries. This is an excellent political capital to be utilized on resolving the issue of the Korean Peninsula. Indonesia will be more than happy to extend its contribution if so requested by the two countries.
T.D.L.: France was one of the first Western countries to establish official ties with an independent Indonesia, and yet their relation is not nearly as strong as it could be. What kind of initiatives could be launched to boost their political dialogue and step up bilateral cooperation, most notably by rekindling the strong flow of trade between the two countries before the 1997 financial crisis. Does Indonesia have any special advantages to offer foreign partners, in terms of investments and strategic partnerships?
H.E.A.E.: I wish to specially underline that the relation between France and Indonesia has been and is very good. As I have mentioned earlier, recently there has been an increase of technical cooperation extended by France to improve the capacity of Indonesian officials in the area of law and human rights as well as in disaster management. In order to further strengthen that relations, the two countries are now considering to have a structured dialogue at senior official levels. When necessary, the level of the dialogue will be elevated at ministerial level. Both sides expected the structured dialog could begin by the end of this year.
On the issue of trade and investment, it is to be acknowledged that it needs reinvigoration. Government officials however, they can only facilitate. The current business activities are in the hands of the business people themselves. Thus, what the Embassy of Indonesia can do is to facilitate business meetings. The Embassy has undertaken four business meetings since last year, three in Paris and one in Indonesia. Other efforts that have been exerted by the Embassy are to introduce Indonesian companies and their products through the distribution of brochures. At the same time, the Embassy also sends regularly information on trade and investment opportunities available in France to the relevant Indonesian companies. During these past few months, various French companies have shown interest to invest and open their branches in Indonesia.
Other important aspect of the relation is tourism sector. Both countries have finalized an MoU on Tourism and they are ready to be signed. By having this MoU on Tourism, cooperation in the tourism sector between the two countries can be further developed. Furthermore, bearing in mind that people to people and business to business contacts are very important for the business communities, the flow of tourist between the two countries is also hoped to increase the level and the volume of those contacts. At present, there is a growing number of French tourism industry investing in Indonesia, such as in Bali and Lombok. They have permanent representatives in Indonesia.
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