Indonesia is experiencing a democratic decline. Assuming the G20 presidency is likely to cause even more democratic setbacks.
While Indonesia’s G20 presidency has received a positive a response from the public, it will likely be marked by a strong neoliberal economic policy and stability at home, which is supported by the powerful alliance that engages politico-businesses and large corporations. This will potentially degenerate democratic processes, which has been an issue in recent years — freedom of expression is at stake.
As Indonesia assumed its G20 presidency on 1 December, 2021, the whole government was evidently excited, especially President Joko “Jokowi” Widodo, who shared on multiple occasions how proud he is to be chairing the world’s 20 largest economies. For Indonesia, as the only Southeast Asian nation to ever become a G20 member, it is indeed an honour which could invigorate its global and diplomatic presence.
Speaking before business leaders during the Indonesian Chamber of Commerce — Kamar Dagang dan Industri Indonesia (KADIN) — meeting early last month, Jokowi elucidated that there will be three key aims during Indonesia’s term leading the G20: strengthening global health architecture, transitioning to green and renewable energy, and promoting the digital economy. Nevertheless, chairing the prestigious group and hosting the summit this year is also a challenge. As the G20 accounts for 80 percent of the world’s GDP, conflicting interests and contestation among its members will be part of many negotiations. That is where Indonesia will be facing real defiance when advocating for certain agendas, as underlined by Jokowi.
The discourse regarding strengthening global health architecture deserves attention. The public certainly hope that Indonesia can speak on behalf of developing countries. For example, in order to push for vaccination equity, Indonesian Foreign Minister Retno Marsudi said that the country, “supports the vaccine patent waiver to boost global vaccine production capacity… to pave the way for equitable vaccine access for all.”
However, inequality levels of the health industry globally are very high, and this is not an easy issue to overcome due to the polarisation of economic interests among big players in the G20. For vaccine distribution alone, the United Nations estimates that about 67.6 percent of people in wealthy countries had received at least one dose by 12 January 2022 — while in low-income nations, only 11.36 percent of people had received one dose of the vaccine.
Pushing for a “green” economy is yet another challenge for Indonesia. Some countries have also promoted the transition in the past. The European Union, for instance, adopted a New Circular Economy Action Plan (CEAP) in March 2020 as part of the previous European Green Deal to make the region climate neutral by 2050. This plan has affected its trade partner countries like India and Indonesia. India was constrained to adjust its textile policy, while Indonesia has faced problems regarding the entry of its palm oil products to the European market.
Indonesia is likely to benefit from a green economy. For instance, the country has the capacity to be a major player in the electric car battery industry, as it controls the largest reserves of nickel resources in the world. This sector is also expected to support Indonesia’s target of having 70 percent new and renewable energy usage by 2050.
However, such commitment also seems too ambitious, given Indonesia’s high dependence on conventional sectors, such as manufacturing, forestry, mining and quarrying, as well as automobile trade, which combined make up 63.66 percent of Indonesia’s GDP. The direct link of powerful political elites and conglomerates to those sectors also makes it more complicated. It is therefore not surprising that a recent report has shown Indonesia’s low performance on its “green policies.”
Therefore, rather than pursuing its entire agenda, Indonesia will likely focus on economic recovery and development, in preparation for life after the COVID-19 pandemic. With economic growth in the third quarter of 2021 at 4.51 percent, Indonesia is likely to utilise the G20 forum to promote investment, the digital economy, as well as production and capital expansion to drive this trend.
Firstly, Indonesia will surely push for more inward investment. As Jokowi said during the KADIN’s leadership meeting, “investment is the driving force of our economic growth.” The government, therefore, aims to reach an investment of IDR 1,200 trillion in 2022, an increase from this year’s figure of IDR 900 trillion. As the main forum for world finance ministers, the G20 provides strategic multilateral negotiation to support Indonesia’s investment goal.
Secondly, Indonesia will bolster the growth of the digital economy, which during the pandemic experienced a growth of almost 50 percent and is estimated to be US$70 billion in value this year — an impressive trend that is expected to continue at least until 2025. This growth is boosted by progress in e-commerce, internet users, and digital financial services.
Thirdly, increasing production in several sectors especially energy, mining, and automotive manufacturing will become the government’s priority. Last year, these sectors experienced a significant decline due to the pandemic, which also reflected the global economic disruptions. Now they are starting to bounce back with promising growth.
Last November, for example, the Association of Indonesian Automotive Industries —Gabungan Industri Kendaraan Bermotor Indonesia (GAIKINDO) — organised the GAIKINDO Indonesia International Auto Show (GIIAS) to enliven next year’s car production and sales. It is noteworthy that this year car sales exceeded expectations, with a 67 percent increase to 851,222 units from January to October, compared to the same period last year.
Yet this is where authoritarian policy tendencies overshadow Indonesian economic priority. To support this economic recovery, the government will heavily rely on market-oriented policies that provide ease for doing business and boost the flow of investment, while also securing political stability for big corporations, including through the new Omnibus Law on Job Creation (Undang-Undang Cipta Kerja).
Although this law was recently overturned, it will stay in place for at least two years while the government is preparing for necessary amendments. Right after the court’s decision, Jokowi told the media that he is certain that, “the government guarantees investment certainty and security in Indonesia.” While this job creation bill was praised by big businesses, it has been criticised by academics and activists for its controversial and authoritarian tendencies — such as damaging civil rights, specifically those of women and indigenous workers, causing major problems for the environment, and concentrating wealth and power alliances in the hands of the few.
Hence, the government’s economic recovery strategy amid its G20 presidency is likely to also cause democratic setbacks and the disruption of civil liberties — something that has often been taking place in recent years. Indonesia has been warned by numerous reports, including Democracy Index 2020, of its democratic decline, and the country has been labelled as a “flawed democracy.”
Moreover, the unpredictable political situation in Indonesia will continue, affected both by the broader social cause of the COVID-19 pandemic, and the complex political atmosphere ahead of the 2024 presidential election. During the pandemic, we have seen alarming trends like the increasing involvement of the military in civilian matters, ideological division, as well as the increase of restrictions on freedom of expression.
While the Indonesian people celebrate the country’s role in chairing the largest twenty economies on the planet, our utmost concern also lies in the social and political implications of the government’s preferred neoliberal economic policy.
Faris Al-Fadhat is a Senior Lecturer of International Political Economy at the Department of International Relations, Universitas Muhammadiyah Yogyakarta, Indonesia. Currently he is Vice-Rector for Student, Alumni and AIK affairs.
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