Indonesian student protests threaten Jokowi's reform pledges

JAKARTA – Indonesia’s biggest student demonstrations in decades are testing President Joko “Jokowi” Widodo’s pledge to go all out in his second term to boost growth in Southeast Asia’s largest economy, a former finance minister and a government adviser say.

Tens of thousands of students have hit the streets in recent weeks to protest against a new law that critics say undermines the fight against corruption, alongside controversial plans to revise the criminal code and several other issues.

Jokowi has vowed tough reforms, such as overhauling restrictive labor laws and freeing up foreign ownership in more areas, to reinvigorate an economy battling weak commodity prices and fallout from the U.S.-China trade war.

But protests risk making it harder to drive through reforms by sapping not just the president’s popularity but also that of the political parties that back him, said Chatib Basri, the finance minister in 2013 and 2014 under Jokowi’s predecessor, Susilo Bambang Yudhoyono.

“Structural reforms can go forward only if there is high political capital, such as when the president adjusted fuel prices,” said Basri, referring to Jokowi’s landmark decision to cut subsidies on politically sensitive fuel prices soon after taking office in 2014, while riding a wave of popular support.

“Now he won’t touch things like that. The current political condition makes it hard for the president.”

Jokowi, who will be sworn in for a new term on Oct. 20, has said he faces no burdens in doing what Indonesia needs, since a president can only serve a maximum of two terms.

But pressure from the student protests has been coupled with a spike in tension and unrest in Indonesia’s restive easternmost region of Papua, as well as the worst forest fires since 2015.

And when two student protesters were killed last week, Jokowi said he would consider revoking a law that critics say weakens Komisi Pemberantasan Korupsi, the corruption eradication commission that is one of Indonesia’s most popular institutions.

Earlier, he ordered parliament to delay a vote on changes to the criminal code to ban extra-marital sex, punish insults to the president and prescribe jail for women who get abortions, unless they face a medical emergency or suffered rape.

Jokowi has been besieged by “extremely intense” jockeying for posts as he tries to build a Cabinet of technocratic ministers, a presidential adviser said.

Initial acceptance of the controversial new laws was partly an attempt to appease parties denied Cabinet posts and ensure their support in passing unpopular bills, said the adviser, who declined to be identified, due to the sensitivity of the issue.

Kevin O’Rourke, a political analyst based in the capital, Jakarta, said that while Jokowi may be able to salvage the graft agency’s independence to boost his anti-corruption credentials, the prospect of economic reform looks more remote.

“The show of force by demonstrators may make Jokowi reconsider certain economic reforms that inevitably engender resistance from certain groups,” O’Rourke wrote in his newsletter, Reformasi Weekly.

Reforms that could be stalled include fuel subsidy cuts, changes to labor market regulations resisted by unions and land administration rules that opponents can portray as being anti-poor, O’Rourke added.

Students have already called for Jokowi to drop his planned revision to labor laws.

Finance Minister Sri Mulyani Indrawati, who is widely respected, told reporters she hopes Jokowi’s reform agenda will not be bogged down by the protests.

“The public wants a better Indonesia and what have been voiced were legitimate, good messages, such as wanting to eradicate corruption,” she added.

A special official for economic issues at the presidential office did not reply to a request for comment.

With economic growth expected to slow for the first time since 2015 to 5.1 percent this year, Basri said there is limited room for fiscal and monetary policies to counter that momentum.

The government has forecast 5.3 percent growth next year, though Basri, who now lectures on economics, predicts growth could slip below 5 percent in 2020.

The central bank has cut interest rates three times this year and sought to inject liquidity into financial markets to lift growth.

Basri said flagging tax revenue means the government has been forced to put a lid on spending, while bond issuances to plug a fiscal deficit are causing a “crowding out” of market liquidity.

“The only solution is to get money from abroad to come in through foreign direct investment (FDI),” he said. “But how can you attract investment without structural reforms?”

FDI in the first half of 2019 slipped 6.6 percent from a year earlier to $14.2 billion, government figures shows.