15.03.2012
Indonesian President Susilo Bambang Yudhoyono was for years one of the most consistently popular public officials in Asia. His efforts to rein in corruption gave many Indonesians hope the country was finally back on track after years of chaos.
But more recently, Mr. Yudhoyono and his party have seen their public ratings plunge, as frustration builds over stalled reforms, new corruption scandals, and other problems. Now, a government plan to increase fuel prices is emerging as a crucial test.
Indonesia has long been urged by economists to curb its fuel subsidies, which cut deeply into government coffers as global oil prices rise. But its decision last week to allow prices to climb as much as 33% next month is highly sensitive in a country where nearly half of the 240 million population live on less than $2 a day.
As unions threaten massive rallies against the fuel-price increase next week, President Yudhoyono's ability to push it through is going to be a test of whether his leadership is helping or hindering the advancement of Southeast Asia's largest economy.
After winning re-election to a second term in 2009 with more than 60% of the popular vote, Mr. Yudhoyono's approval ratings have slipped to close to 40% today, according to some surveys. His party has fared much worse. According to the latest poll, the percentage of voters that would choose Mr. Yudhoyono's Democrat Party if there was a national election today has fallen to less than 14% from more than 20% two years ago.
A fuel-price increase has been repeatedly proposed and delayed for more than a year, but officials now say the measure can't be delayed any longer even if the move results in faster inflation.
Protests against the measure so far have been small, with sporadic rallies in Jakarta and a few other Indonesian cities in recent days. Similar demonstrations appeared, and then faded, when the government pushed through fuel-price increases in previous years, including 2005. Some unions have threatened to bring tens of thousands of people to the streets of Jakarta starting next week and continue to disrupt the flow of traffic and people in the capital until plans for the fuel-price increase are abandoned.
Members of Mr. Yudhoyono's ruling coalition have warned that security forces will be mobilized to protect the government if protests spread or trigger a coup—a warning that has only fueled debate about Mr. Yudhoyono, who some analysts believe is failing to show firm leadership on fuel prices and other issues.
"The real source of insecurity stems not so much from the streets, but from the lack of support from some coalition partners," said a recent Jakarta Post editorial. "The problem is not so much external as it is internal: Yudhoyono's inability to manage his coalition government."
Other analysts figure the government may just delay the fuel-price rise to avoid unrest. In January, Nigeria's president was forced to partially reinstate a popular fuel subsidy after mass demonstrations.
Mr. Yudhoyono's government risks becoming "a lame-duck administration," if it can't successfully raise government-controlled fuel prices, said Anwar Nasution, a professor at the University of Indonesia and former central banker. "They have to have the courage to do this. I don't understand why they keep delaying."
If Mr. Yudhoyono can survive the short-term backlash for his plans to raise the fuel prices, he will have billions of dollars more at his disposal to use on government projects and helping the poor. Even with the price increases, the government's fuel-subsidy bill will likely reach more than $15 billion this year. Without the price adjustments, the country would see its budget deficit balloon with rising oil prices.
Julian Pasha, a spokesman for Mr. Yudhoyono, said in a recent interview that the president isn't worried about his approval ratings and remains committed to leading reforms. Other officials note that the government intends to follow through on the fuel-price increase with spending to offset some of the pain for lower-income families.
Supporters of the president have also argued his powers are more limited than people realize, and that he deserves credit for just keeping the unwieldy nation of 17,000 islands together.
Indonesia's economy continues to boom, despite the grumbling, and foreign investors keep rushing in. The country drew a record $20 billion in foreign direct investment last year and gross domestic product growth hit 6.5%, a 15-year high.
Even so, economists say they believe the country is missing out on an opportunity to push growth to a level more like China's as the weakened position of Mr. Yudhoyono and his party makes it harder to drive more reforms, rein in graft and tackle populist policies like fuel subsidies.
"He's withdrawn himself from active problem solving," said Kevin O'Rourke, a Jakarta-based political analyst. "He's become less ambitious as he nears the end of his term."
Mr. Yudhoyono won re-election with promises to keep fighting graft after scoring numerous successes in prosecuting corrupt officials in his first term. Yet Indonesia continues to rate poorly on international indexes measuring corruption published by Transparency International, which most recently ranked Indonesia 100 out of 183 countries, with 183 being the worst.
In the latest case, high-ranking members of Mr. Yudhoyono's party have been implicated in a spreading scandal involving alleged kickbacks tied to the construction of an athletes' village for last year's Southeast Asian Games.
Critics say the president should have acted sooner to distance himself and punish those allegedly involved; his supporters says the president is letting justice take its course.
Meanwhile, many residents argue Mr. Yudhoyono has been soft on religious hard-liners behind a recent series of attacks on minorities, including Christians and members of a Muslim sect.
In one case last year, members of a mob that killed three adherents of a minority Muslim sect in an attack with machetes and rocks were sentenced to only three to five months in prison, drawing harsh criticism from rights groups.
Other than passing a law outlining how the government should buy land for important infrastructure projects, economists say the government has made little headway recently in clarifying and untangling regulations that often make it difficult to do business in Indonesia. On Wednesday, the government upset companies further, saying it would start requiring foreign investors to cut their stakes gradually in mining assets to less than 50% after previously letting them hold up to 80% of mining companies.
The administration's most glaring failure may be in infrastructure. Many projects to build roads, ports, airports and power plants have been stuck for years for lack of all the approvals needed for financing or even a well defined bidding process. Year after year the government fails to spend the money it has allocated for infrastructure even as surging traffic has created constant gridlock in Jakarta and chronic delays at its main port—leading to yet more criticism of Mr. Yudhoyono.
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