We wrote a blog back in 2016 entitled Joining the Dots, which raised a few eyebrows because we were supporting the direction and vision the then newly elected President Widodo wanted to take the country.
Seems quite a few people didn’t see things in the same way and instead of being upbeat, they were quite negative in their opinions and comments.
Each to their own, but we remain positive about Jokowi and the course he has set to try and lift Indonesia to a position of becoming a serious economic power, both regionally and globally.
We also understand this isn’t going to happen overnight and long-term planning needs to start somewhere. And we think it’s started!
Indonesia Inc.
Now that Jokowi has been re-elected and created a new cabinet, we thought it would be a good time to revisit the idea of Joining the Dots, which we believe is again a relevant headline especially when we take a look at the key appointments in his new administration.
There should be no doubt Jokowi is focused on moving Indonesia forward in a very uncertain world. Some have even gone as far as to say that now is the time for Indonesia Inc. And the CEO, leading the charge is Jokowi.
Omnibus Law
One of the dots to be aware of is the much talked about Omnibus Law, which many observers believe will simplify regulatory constraints. Kompas (and other local newswires) suggest Jokowi will invite the House of Representatives to draft two significant laws – the first an Employment Creation Act and the second the UMKM Empowerment Act.
UMKM is the acronym for Usaha Mikro Kecil Menengah or Micro, Small and Medium Businesses.
“Each of these laws will become the Omnibus Law; a law which also revises several laws, even dozens of laws,” Jokowi said in a speech directly after his inaugaration.
Without going in to too much detail here, the intention seems to be to streamline regulations, cut unnecessary red-tape (and time) and to be consistent in delivery.
We don’t know when this will happen, but it could be very soon and we think it will have a significant impact on the ease of investment; something the country needs to be attracting more of. The Finance Ministry has also announced soon to be released tax benefits for both domestic and international investors.
Managing the business
For sure, the hottest topic is how coordination and cooperation will be executed between the 4-Coordinating Ministers and the other 30-ministers and their ministries with 12-appointed deputy ministers.
The 4-Coordinating Ministers have been given the right to veto any movements from their respective ministries even though the legal strength of this has been questioned.
However the aim is clear: the CEO wants his COO’s to manage their directors in an efficient and progressive way over the next 5-years.
The political structure and power of various coordinating ministries, political parties and retired generals seems to be well balanced and set to go to work embracing and securing a controlling number of chairs/votes in the national assembly (DPR).
One notable player that has yet to be given a role and has had no seats appointed in the new cabinet, is SBY’s Partai Demokrat.
Let’s go through what we see as the most significant cabinet appointments.
Mohammed Mafud MD
Mohammad Mafud MD was appointed Political, Legal and Security Affairs Coordinating Minister. He’s seen as a moderate Muslim and was just 24-hours away from being appointed the Vice Presidential candidate at the start of election campaigns.
Perhaps a deal was struck then for the Coordinating Minister position in return for his continued support for Jokowi.
There are some pundits out there who think he may actually be a strong presidential candidate after Jokowi. But for that to happen he may need to embrace a larger political party, as today he is still an independent.
The Ministry of Transportation and Public Works is now under the same Coordinating Minister, which is something political observers think is a positive move.
Luhut Binsar Pandjaitan
A somewhat surprising move however, was to move BKPM under Luhut’s wings and create the role of Coordinating Minister of Maritime and Investment Affairs. This may be a good move if you look back at Luhut’s exceptional work with the IMF/WB event in Bali last year.
Adding Investments to his role means BKPM is still kept independent from the Finance Ministry, which we think is a good thing.
Airlangga Hartarto
Hartarto’s appointment as Coordinating Minister of Economy and Finance is seen as consolidating Golkar’s support for Jokwoi and as well possibly securing the continued support and investments from tycoons known to support Golkar.
Prabowo Subianto
A mayor surprise to many was the appointment of Prabowo as Minister of Defense. But again this is widely seen as a strategic move to take advantage of Prabowo’s nationalist stance as well as hoping he will take a tough stand against extremists in Indonesia.
Let’s not forget that he also had a significant amount of support in the last election and in a typically Indonesian move, balance is seen as better than conflict.
Fachrul Razi
Another move to fight extremism as Indonesia’s number one enemy was the appointment of former general Fachrul Razi as Minister of Religious Affairs. He’s already made his agenda very clear against caliphate movements and sympathy for such movements within his department will not be tolerated in any shape or form.
He has already stated that officials cannot wear the cadar at work (that’s the full Muslim veil for women), because of security reasons. This has raised criticism from some of the Muslim based political parties and organizations.
Muhammad Tito Karnavian
Existing Chief of Police Tito was appointed Minister of Internal Affairs. This move is seen to strengthen the control of less loyal governors and regencies to ensure a national agenda can progress in the best possible way.
Idham Azis
And this again triggered the appointment of new Chief of Police, Azis who’s seen as a loyalist and close to Tito. It seems very likely that he will have the same approach as Tito, and continue to crack down on terrorism.
To further strengthen the ministers and ministries, 12-Deputy Ministers were also appointed and ten of these are newly created positions.
Mahendra Siregar
Mahendra Siregar, who recently became the ambassador to the US, has moved on to Vice Foreign Minister. He brings expertise in trade relations and is seen as a key player to further develop and continue to grow Indonesia’s various trade agreements.
Several directors of state enterprises are also moving up to Deputy Minister levels in the same departments.
Sakti Wahyu Trenggono
The new Vice Defense Minister is Sakti Wahyu Trenggono, who has long been a candidate for a cabinet posting. The president has assigned him to boost the domestic arms industry and in general support defense minister Prabowo.
Building a Golden Indonesia
If you look at the new cabinet together with Jokowi’s vision for a Golden Indonesia it’s easier to join the dots and get a clearer picture of where the country is heading.
“We should no longer be process-oriented. We have to be results-oriented,” Jokowi said after his inauguration, according to The Straits Times. And that means reviewing, revising and removing everything.
Jokowi’s plans to bring about a Golden Indonesia and a USD 7-trillion economy by 2045 would mean Indonesia would become the world’s 5th largest economy. It’s not an impossible dream but it will need focus and consistency.
It feels like we’re at the point of no return and an exciting and prosperous future is Indonesia’s to take!
