Financial Times
July 23, 2014

The new leader has the chance to take the country to the next level

After an extended count lasting the best part of a fortnight, Joko Widodo, governor of Jakarta, has narrowly won the race to become president of this nation of 250m people. Initial fears that Indonesia’s second truly democratic passage of power might end in violence and chaos have proved exaggerated; the presidential baton has been transferred relatively smoothly. Opportunistic attempts by Mr Widodo’s opponent, former general Prabowo Subianto, to question the fairness of the process have fallen on deaf ears. Given the definitive nature of the result, Mr Subianto should do the graceful thing and concede in a way that confers legitimacy on the victor.

Mr Widodo, universally known as Jokowi, has much to prove when he takes office in October. One reason the result was so close was that he turned out to be a lacklustre candidate, far less organised and politically astute than his more ruthless and better-funded opponent. Things are unlikely to become any easier now the count is over.

Having campaigned against the old elites that have dominated Indonesian politics for so long, Mr Widodo must show that he can govern effectively without their patronage. In particular he must redeem his promise to avoid traditional horse-trading and appoint to his cabinet only those with the character and capacity to hold their offices. Given the new president’s lack of a reliable majority in parliament, this will require political skills of a high order – ones he has yet to demonstrate he possesses on the national stage.

A former factory owner, Mr Widodo made his name first as mayor of Solo, a small Javanese city, and then as governor of Jakarta. In both posts he impressed with his honesty and ability to get things done. Part of his appeal is as a “man of the people” with few ties to the old elites or big business. If he can cut red tape and bring greater transparency to a country that still suffers from shocking corruption he will have performed a service.

But that is not enough. Mr Widodo must also tackle structural weaknesses if Indonesia’s potential is to be realised. At less than 6 per cent, the country’s growth rate is too low for Indonesia’s stage of development. A priority is to repair the fiscal hole. The rising cost of fuel subsidies has widened the budget deficit, just as falling commodity prices have caused a deterioration in the current account. Having consistently called for subsidies to be cut, Mr Widodo must act – even if it costs him some short-term popularity.

Another area that requires his attention is infrastructure, the decrepitude of which is damaging competitiveness and blunting Indonesia’s aspiration to be a regional manufacturing hub. More energy resources and better roads are needed. To assemble the investment capital required, the president must establish a clear framework, ending the dismal situation where project after project becomes snarled up in competing claims over land and permits.

The door should be opened to more foreign investment. Inflows have slowed in recent years as President Susilo Bambang Yudhoyono’s administration sought to protect well-connected companies from the full force of international competition. Mr Widodo should negotiate clear, open rules for FDI – and then stick to them.

In the longer run, education must take priority. In spite of excellent demographics – some 45 per cent of the population is under 25 – too many of those entering the workplace lack the skills to prosper in a modern economy. Mr Widodo should ignore those who argue that raw numbers alone will deliver prosperity, and ordain the needed structural reforms. Fate has presented the new president with a historic chance to take Indonesia to the next level. He should seize it.