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A wake-up call for Widodo

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Barron's Asia

In the annals of bad timing, Indonesia choosing Jan. 14 to broaden the welcome mat for foreign investors deserves prominent mention. President Joko Widodo couldn’t have known terrorists would pick the same day for synchronized attacks in Jakarta. But the act would appear to blow his argument Indonesia is a reborn investment destination to smithereens.

Or so the world thought for about 24 hours. In the days since, events surrounding an attack that killed two civilians should bolster the view Indonesia is back and that its newish leader may be the transformational figure voters and investors hoped. There are even some lessons here for the West as Islamic State spreads mayhem around the globe.

Indonesia, let’s remember, has come an incredibly long way since the dark days of 1997. Back then, it seemed far more destined for failed statehood than the investment-grade economy it is today. The credit for that spectacular feat goes to former President Susilo Bambang Yudhoyono, who from 2004 to 2014 curbed the role of the military, attacked graft, cut red tape and upped investments in infrastructure and education. He also clamped down on radical Islamic elements responsible for a 2002 Bali attack that killed more than 200.

Widodo, known as Jokowi, was elected to accelerate Yudhoyono’s reforms: faster job creation, greater competitiveness and bigger investments in the nation’s human capital and innovative future. His man-of-the-people persona bestowed a Barack Obama-like halo on the youthful former Jakarta governor. The first Indonesian leader independent of the military and dynastic families was known simultaneously as “Mr. Clean” and “Mr. Fix It.” In recent months, though, the buzz across the nation of 250 million people was buyer’s remorse. Ditto for foreigners, who’ve been shifting investments to the Philippines and Vietnam.

The unfortunate timing of last week’s move to change the narrative and allow overseas interests to buy bigger stakes in local firms and industries seemed to underline the point. The rebirth of terrorism — this time by the ascendant Islamic State group — made Jokowi’s economic rebirth case that much harder to make. But since Thursday, we’ve seen reminders of why Indonesians and investors supported Jokowi in the first place.

Jokowi’s calm, methodical and focused response reminded me of his competent handling of the December 2014 crash of an AirAsia jet. He conducted his first international crisis with the transparency and accountability he pledged during his presidential campaign. You can tell much about governments from their response to tragedy, from South Korea’s deadly ferry accident in April 2014 to Malaysia’s lost Boeing 777 a month earlier to Japan’s Fukushima crisis in 2011 to myriad Chinese earthquakes, train or boat accidents and chemical plant explosions.

Unlike Malaysia, which cloaked its MH370 response in bizarre secrecy, Jokowi got directly involved in search and rescue plans, spoke to the media, demanded his government give timely and detailed updates, launched a review of safety regulations and immediately welcomed overseas help. In the hours after the Jan. 14 attack in downtown Jakarta, Jokowi was on the scene taking in the damage, pressuring investigators, meeting with local shopkeepers and letting the terrorists know Jakartans aren’t cowering at their actions.

Jokowi’s words were even more remarkable. “We condemn actions that disrupt public security and disrupt the peace of the people and sow terror,” he said. “I have instructed the police chief and the coordinating minister for political, legal and security affairs to pursue and arrest the perpetrators and their networks” And now, my favorite line: “The people do not need to be afraid and should not be defeated by these terrorist acts. I hope that people remain calm because it is all controllable.”

U.S. Republicans went ballistic when President Barack Obama made a similar plea two days earlier at his State of the Union address. The beauty of Jokowi’s response is what it lacked. He didn’t declare war on Islamic State or terrorism in general. He didn’t suggest a bunch of crazies with rocket launchers on the back of pickup trucks are an existential threat to his proud nation. No clash-of-civilizations nonsense. He didn’t, in other words, give the terrorists what they want: validation and overreaction.

If only we could do a computer simulation to measure the what-if’s since America’s spectacular overreaction to the Sept. 11, 2001 attacks in New York and Washington. By starting two wars, killing untold numbers of Iraqi and Afghani civilians, squandering trillions of dollars, torturing prisoners and wrecking America’s global reputation, U.S. President George W. Bush gave the terrorists all they wanted and more. If all the United States did after 9/11 was reinforce cockpit doors, tighten airport security and focus on targeted special-forces missions, the world might be a better and safer place. And by dropping idiotic suggestions like banning Muslim immigrants, presidential wannabes like Donald Trump are still heaping recruitment tools their way.

Jokowi’s words are also in contrast to Francois Hollande’s response to the November attacks in Paris. He told Parliament that “France is at war” with “jihadist terrorism that threatens the entire world.” Granted, last week’s Jakarta death toll is dwarfed by the Paris violence that killed more than 130 civilians — or even the assault on Charlie Hebdo months earlier. But as the nation with the largest Muslim population, Indonesia is home to one of Islamic State’s most aggressive recruitment campaigns, arguably making Jokowi’s challenge the biggest anywhere. I find it reassuring that, unlike Republicans in the U.S. or conservatives in Europe, Jokowi isn’t giving terrorists the exaggerated kudos and overreactions they seek.

How might all this link back to Indonesia’s economy? Since Jan. 14, it’s become fashionable to fear that Jokowi will shelve reform plans to confront an all-to-common foe. Only time, after all, can tell whether it’s an aberration like Bali and the more recent 2009 explosions at Jakarta’s Marriott and Ritz Carlton hotels.

Let’s hope last week was the wakeup call Jokowi needed to get back in touch with his Jakarta governor days (2012-2014). As leader of Indonesia’s capital, a place notorious for corruption and inefficiency, Jokowi operated with a surprising level of transparency. He reduced opportunities for graft, opened the process for green-lighting licenses for infrastructure, plantations and mining, put government procurement and tax collection online, and made more government services electronic to cut out myriad layers of corrupt middlemen. In other words, Jokowi has shown in the past he’s ready for whatever comes his way, whether it’s inefficiency, graft or, now, terrorism.

Right after Thursday’s attack, Jokowi said Indonesians “should not be defeated,” to which his countrymen and women responded with a #WeAreNotAfraid Twitter hashtag. It’s your turn, Mr. President, to do the same to tackle Indonesia’s vested interests and economic challenges. That’s why as wakeup calls go, Jan. 14 may be a huge one.

William Pesek, executive editor of Barron’s Asia, is based in Tokyo and writes on Asian economics, markets and politics. www.barronsasia.com