thejakartaglobe – Jakarta has never been more closely watched by the rest of the world — and that is a sign of strength

Readers of the Jakarta Globe will no doubt have a sense of how closely the recent presidential election was followed outside of Indonesia. They perhaps may still underestimate just how much interest the election generated, coming as it did closely after the election of Narendra Modi in India, and how much interest there is in events in Jakarta and the progress of the new administration. Part of the challenge for Indonesian politics is now in capturing that surge of goodwill and interest for Indonesia’s benefit. And recognizing the extent to which Indonesia is now firmly on the map once reserved only for BRICS — perhaps in the seat recently vacated by President Vladimir Putin’s faltering Russia.


It is fair to say that the view outside Indonesia is that 2014 was a different kind of election and that President Joko Widodo is a transformational politician. Certainly he brings a different kind of background to the highest role in Indonesian politics. What many outside Indonesia understand less well is the scale of some of the challenges the new president and the legislature in Indonesia face. But I think that there are three areas where Jakarta’s — and Jokowi’s — instincts are being closely watched.

The first is in reinforcing Indonesia’s fiscal strength for a new generation of investment in growth capacity. Global investors are — rightly — bullish on Indonesia’s growth potential, but they are also increasingly alert to the foundations of that growth. Whether it is unwinding fuel subsidy schemes to help close a wide infrastructure deficit, or finding the capital investment to continue to develop the digital infrastructure of a country that is one of the most online and networked in the world, this is a big challenge. Building the fiscal space to secure this growth base requires raising a low tax base and navigating debt sustainability carefully. For all of the current tension in Indonesian politics, these aims are clearly shared across the divide between ruling parties and opposition, so the challenge will be building coalitions in Indonesia’s interests.