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The Political Economy of Inclusion: Current Reform Challenges in Indonesia under Jokowi

Organiser:
Andy Sumner
King’s College London
andrew.sumner@kcl.ac.uk

Lukas Schlogl
King’s College London
lukas.schlogl@kcl.ac.uk

Chair: 
Diding Sakri
King’s College London
Diding96@gmail.com

Discussant:
Diding Sakri
King’s College London
Diding96@gmail.com

 

Achieving inclusivity for the whole population by sharing the benefits of modernization, is a key economic and political challenge in contemporary Indonesia. It requires sustaining a path of economic growth that reaches vulnerable and marginal groups while, at the same time, protecting and managing a young legacy of decentralization and direct democratic participation. This must happen in a context of widespread informality, a growing lower-middle class, budget constraints, a slowing economy and unequal regional capacity.

This panel addresses key challenges related to Indonesia’s quest for inclusive growth and participatory governance. It delivers an update and assessment of the current administration’s social policy agenda, considers the impacts of decentralization on welfare, examines questions of access to social policy provision and explores Indonesia’s recent struggle with defending direct local elections.
Paper 1: Inclusive Growth under Jokowi

Arief Yusuf
Padjadjaran University
arief.yusuf@fe.unpad.ac.id

In this paper we discuss the direction and current status of distributional pattern of economic growth under Jokowi. We discuss the policy changes the new president has put in place since last autumn and their distributional impacts. The recent period has seen diverging trends in inequality across Indonesia and a rise in Indonesia’s official poverty count. Looking ahead, we note the distributional impacts of slowing growth are likely to hamper future poverty reduction and impact on the distributional pattern of growth. We argue that such distributional impacts may be balanced in the medium term by the changes in social policy and budget reallocations under Jokowi and realized the major expansion of infrastructure and employment creation and multiplier effects it could generate.

 

Paper 2: Decentralisation and distribution: A multi-dimensional taxonomy of Indonesian districts

Dharendra Wardhana
King’s College London
dharendra.wardhana@kcl.ac.uk

Indonesia has put in place a system of fiscal decentralisation to the district administrative level. However, most districts are still heavily dependent on the central government to fund their expenditures. A single formula currently determines allocations and fiscal gaps for every district. We develop a taxonomy of Indonesia’s districts using the World Bank’s INDO-DAPOER dataset and a Cluster analysis based on: (i) economic growth; (ii) human development; (iii) the quality of governance; and (iv) local autonomy. We consider the current allocation of central resources and an alternative based on the taxonomy developed.

 

Paper 3:Not enough money to go around: Jokowi’s inevitable dilemma over budget allocation

Kyunghoon Kim
King’s College London
sidkim0208@gmail.com

During his first month in office, Jokowi introduced Indonesia Health Card, Indonesia Smart Card and Family Welfare Fund, proving his commitment to strengthen social policies. As we entered 2015, the Jokowi government rapidly shifted its policy focus to economic infrastructure. This is reflected in the 2015 revised budget with its capital expenditure increasing by 71% compared to the previous year. Also, the National Medium Term Development Plan 2015-2019 shows that the government plans to contribute 2,760 trillion Rupiah in economic infrastructure investment. Although the government has made some fiscal room by scrapping wasteful fuel subsidies, difficulties of expanding the tax revenue base and economic slowdown will limit its spending capacity in the future. Therefore the government will have to decide how to “split” its budget on social policies and economic infrastructure in coming years. We consider various political-economic factors that will affect Jokowi government’s spending priorities.

 

Paper 4: Who saved Indonesia’s Direct Local Elections? Twitter engagement in the context of the 2014 ‘Pilkada bill’

Lukas Schlogl
King’s College London
lukas.schlogl@kcl.ac.uk

Indonesia’s direct elections at the local level, known as ‘Pilkada’, are considered a cornerstone of the country’s young, decentralized democracy. In September 2014, an electoral franchise bill passed the Indonesian House of Representatives (DPR) which, temporarily, abolished the direct Pilkada in favour of an indirect electoral procedure. In a climate of partisan divide, the passing of the bill was attacked by many as a step back into the authoritarian ‘New Order’ past and was followed by an outburst of public outrage in social media. In response, then-president Susilo Bambang Yudhoyono distanced himself from the bill and initiated a process to legally annul it. This annulment was, subsequently, reaffirmed by the DPR in early 2015.

This paper analyses the complex dynamics of the ‘Pilkada bill’ controversy, its extensive reverberations in social media as well as the political response to it. Its scientific contribution is two-fold: (1) it documents, descriptively, a salient case of Twitter’s political impact and evaluates, normatively, its significance for maintaining a resilient democracy; (2) it identifies drivers of online collective action by determining the geo-demographic and socioeconomic factors of political Twitter use in Indonesia. The paper draws on a novel dataset from an online survey distributed to Twitter protest participants and compares online engagement to representative attitudinal data from a public opinion survey.