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Indonesia’s New President What does the future hold? July 25 th 2014

Indonesia’s New President: What does the future hold?

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A look at Indonesias newly elected President Joko "Jokowi" Widodo and an analysis of the new political landscape and policy outlook.

Text of Indonesia’s New President: What does the future hold?

Page 1: Indonesia’s New President: What does the future hold?

Indonesia’s New President

What does the future hold?

July 25th 2014

Page 2: Indonesia’s New President: What does the future hold?


Population: 250 million (4th largest population in the world) GDP: $868.3 billion Projected growth: 5.3% (2014), 5.6% (2015) FDI inflow: $23 billion (2013) The biggest economy in Southeast Asia and ASEAN, accounting for

1/3rd of ASEAN GDP Bain & Co. says by 2030 Indonesia will be world’s 9th largest

economy World’s 3rd largest democracy World’s largest Muslim majority country Archipelago nation of 17,000 islands stretching 5,150 km The most populous island is Java, where 141 million people or

around 60% of the population reside and the nation’s capital, Jakarta, is located

Executive Presidential system and constitutional republic Alongside the presidency, considerable powers rest with the

national parliament (DPR) and local governments after a process of decentralization starting from 2001

Indonesia at a glance….

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1. Indonesia’s new president

and political landscape

2. The presidential inbox: key

issues for Jokowi’s first 100


3. An introduction to our

corporate & public affairs


Page 4: Indonesia’s New President: What does the future hold?


Man of the people wins Indonesia’s Presidential ElectionAfter an extremely close, tense and dramatic election, Joko Widodo, Jakarta’scurrent Governor, was declared the winner of Indonesia’s Presidential electionby the Indonesian Election Commission (KPU) on Tuesday evening. Joko Widodo,or ‘Jokowi’ as he is popularly known in Indonesia, won 53 percent of the vote tohis rival presidential candidate Prabowo Subianto’s 47 percent. President-electWidodo, a former furniture businessman from Solo, central Java, has risenthrough the ranks of Indonesia’s decentralized local politics from Mayor of Solo,to Governor of Jakarta to now President-elect of the world’s third largestdemocracy; most populous Muslim country; and largest economy in SoutheastAsia.

This is a huge achievement for such a young democracy born after the riots andmass protests which unseated Suharto’s New Order regime in 1998, after 32years of authoritarian rule. It is also a sign that democracy is now fullyentrenched in the Indonesian psyche and a rejection of the past. Jokowi’spresidential rival, Prabowo, previously served as a top General to Suharto andwas previously married to his daughter Titiek Suharto. This election has brokenwith past traditions that have favored old political elites and military generals,and suggests that Indonesia’s local leaders can now rise to the very top.

The election has not been without controversy. A few hours before Jokowi wasofficially declared the election winner, candidate Prabowo gave a televised pressconference denouncing the Election Commission and alleging widespread votingelectoral fraud. Although not presenting evidence of this on a scale that wouldlikely make a significant impact, Prabowo’s camp now will launch an appeal toIndonesia’s Constitutional Court, which will rule on the evidence and make afinal verdict - which cannot be overturned - by August 20th. Orthodox opinion isthat a ruling that overturns the KPU’s decision is unlikely given President-electWidodo’s 8 million vote margin, however, this is Indonesia. The old parliament(DPR) staggers on until September 30th and is dominated by Widodo’s politicalenemies; they still may plan to cause all manner of issues that could disrupt thecurrent process as it is.

President-elect Jokowi is due to be sworn in on October 20th, a few days afterIndonesia’s new legislators take their seats in the Indonesian parliament on

October 1st. The new government will then have to work with the new parliamentto get legislation through, and this is where the new challenges will truly lie (as ifit has been easy by then!) Indonesian parliamentary politics is multi-party andbased on loose coalitions and compromise. This is a democratic system thatwas constructed to provide checks and balances on presidential power andprevent a return to centralized and authoritarian presidential rule. Jokowi willhave to work with the new parliament to govern in a truly effective way. Betweentoday and October 20th political alliances will rise and fall and it is yet possiblethat we may see a completely different parliamentary coalition supporting thenew President.

On Jokowi’s desk when he walks into the State Palace will be a number of policychallenges, among them regulatory uncertainty in both the mining and oil andgas sectors, continued widespread corruption, bureaucratic inefficiency andinfrastructure bottlenecks, and an economy which has slowed over the last year.Jokowi was also elected on a mandate that he would provide better basicservices in education and health for Indonesia’s poor, and tackle grindingpoverty which still affects millions across the archipelago, especially in morerural areas. We expect healthcare to be the centerpiece of his first 100 days, butequally he must also tackle the level of fuel subsidy which is about to break itsstatutory limits (as a percentage of GDP): technically he can be impeached ifthis happens, but Jokowi has already pledged to cut the subsidy in his first 100days in office. It has been a dramatic election season, but the political drama isonly just beginning.

Stephen Lock

CEO Edelman Indonesia & Head of Public Affairs, Southeast Asia

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The Indonesian Election Commission (KPU) declared onJuly 22nd that Joko ‘Jokowi’ Widodo, of the IndonesianDemocratic Party of Struggle (PDI-P) has won Indonesia’s2014 presidential election, but some uncertainty stillremains as the rival candidate, Prabowo Subianto of theGreat Indonesia Movement Party (Gerindra) has now filledfor an appeal at Indonesia’s Constitutional Court.

The Indonesian Constitutional Court is controversial andlacks public trust since the recent life imprisonment of thehead of the former Constitutional Court for corruption inrulings over election disputes. The Court’s final verdictcould well resemble a replay of the US presidentialelection in 2000 where the Supreme Court ruled on thenext president. The Constitutional Court’s verdict must begiven by August 22nd before the inauguration of the newpresident on October 20th.

Political uncertainty &

the Constitutional Court

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Resolving the Uncertainty: The Timeline

August 20th: Date by which Constitutional Court must rule on Prabowo’s lodged appeal

October 1st: The new Indonesian parliament (DPR) assembles

October: Likely announcement of key ministries just prior to accession of the new president to office, with some horse-trading for final ministerial and vice-ministerial posts completed as DPR ruling coalitions shift and finalize. (There is an outside chance President-elect Widodo will have a minority coalition in the DPR)

October 20th: Joint session of both parts of parliament confirm the President of the Republic of Indonesia

October 20th President-elect Widodo’s first five year term begins

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Joko Widodo: Indonesia’s 7th PresidentJoko Widodo has been a true outlier of the Indonesian political scene. From humblebeginnings as a successful furniture retailer, Jokowi, as he is popularly known, was the highlysuccessful Mayor of the relatively small city of Solo (since 2005) where he transformed a cityracked by crime and a reputation as a terrorist hotspot into a regional center for arts andculture, which has started to attract international tourism. His campaign against corruptionearned him the description of being the most honest politician in Indonesia. Joko Widodo’svictory over Jakarta’s incumbent governor Fauzi Bowo in 2012 was largely due to his trackrecord as mayor of his home town and his reputation for honesty and humility. This reputationhas carried him through to the state palace in a country where politicians are often distantfrom the people in their daily dealings and frequently corrupt.

During his time in Jakarta, his hands on, street politics style of governing has won himplaudits and great affection. Jokowi is famous for ‘spot checks’ and frequent daily groundvisits to communities, government institutions and projects. This style has also been crudelyreplicated by other national level politicians, keen to obtain a more populist image. During histime governing Jakarta, his introduction of health cards (where the poor can receive freeaccess to basic healthcare) has been his most lasting legacy. He has also made inroads inshaking up bureaucracy and improving Jakarta’s woeful public transport system, with theintroduction of upgraded and a greater number of Trans-Jakarta buses, and the start of anambitious MRT system.

Although in power for a short time, his national popularity has remained strong and resilient,despite a dent in his poll ratings during a highly competitive and controversial election race.He managed to endure attacks on his character and smear campaigns, and prove himselfcapable in presidential debates, eventually winning the election with 53 percent of the vote,despite a highly organized and well-funded Prabowo campaign.

The nation now expects change and for him to bring his ‘can do’ attitude and municipalmanagement to the national level. He is likely to make social issues such as healthcare,education and combating poverty the major focus of his administration. Fighting corruptionand reforming bureaucracy will also be on the agenda; Indonesians will expect to seeprogress on this front, after a previous governing administration that was embroiled inmultiple corruption scandals.

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A look at the new ruling party: the PDI-P

The PDI-P, one of the most successful parties in the Indonesian democratic era, is closely linked to

the political life of its chairperson Megawati Sukarnoputri, the daughter of the country’s

independence leader and first president Sukarno. Her first election to chair the Indonesian

Democratic Party in 1993 led to a split and the affix “Perjuangan” = struggle.

Aeran Ismail

Director, Corporate and Public Affairs

Megawati Sukarnoputri was vice president of the republic from 1999 to 2001 and (after president

Abdurrahman Wahid had to step down) president from 2001 to 2004.

The party has a functioning infrastructure with branches all over the country but with strongholds and

higher election results in Java and Bali.

After 10 years in opposition, Megawati’s PDI-P is now in power with Joko Widodo as the President of

Indonesia. Megawati will still wield considerable influence behind the scenes and will remain as a key

political power broker. She also may act as a gatekeeper to Indonesia’s new president. A key issue when

Jokowi takes office will be how independently he can act and if Megawati is really willing to take a back


Page 9: Indonesia’s New President: What does the future hold?


An overview of Indonesia’s new political landscape In terms of the outlook of a Jokowi government and the likely

implications for business, some nationalist and protectionist policies will

remain in place, but many analysts predict that Jokowi will continue to

govern in a moderate and open style.

Jokowi, while still being nationalistic by western standards, is viewed as

more open in his economic approach. It is telling, for example, that the

Indonesian stock market shot up when the majority of ‘quick count’

polls after the July 9th election stated that Jokowi had won and again

with the declaration of his victory by the Electoral Commission (KPU) on

July 22nd.

Beyond this, Indonesia’s political landscape is further complicated by a

geography that spans over 17,000 islands and decentralized democracy

across 34 provinces and 510 districts, with district and provincial

leaders elected directly at the local level and entrusted with the power

and responsibility to provide the majority of services to their electorates.

They also have a number of local legal powers which can complicate the

regulatory process. Many businesses entering Indonesia for the first

time find it hard to navigate Indonesia’s complex system of

decentralised governance and confusing, and often contradictory,

regulations. Building alliances and engaging with relevant stakeholders

in the new government will be vital for business success.

Page 10: Indonesia’s New President: What does the future hold?


The new Indonesian parliament (DPR)

Of the total 560 seats in the House of Representatives, PDI-P secured 109

seats. PDI-P are backed by Hanura, NasDem and PKB, while for the time

being the opposition are made up of Golkar, Gerindra, PPP, PKS, PAN and


Indonesia’s next government will not be dominated by a strong majority,

instead it will be a government of multiple coalitions once more. This means

that a Jokowi administration, will be much more constrained in pushing new

policies and reforms through the DPR and getting stuff done. He will have to

compromise and make deals with other parties. The new parliament will be

challenging for the new administration to work with. This also makes radical

or large-scale reforms much more unlikely.

Opposition parties to the biggest party, PDI-P, also recently passed a revision

to the law on legislative assemblies (UU MD3) which means that the PDI-P

(although the largest of the parliamentary parties) will not automatically

obtain the powerful and important speaker post, as has been the norm in

previous governments. This just goes to show the fractious future that the

new parliament will face. This said, we have seen signs that current

coalitions are likely to realign and evolve once Jokowi takes the reigns of


The expectations that a Jokowi government can push through new reforms

and shake-up Indonesia’s political process maybe optimistic. Politics and

policy making will very much be the ‘art of the possible’.

Source: Jakarta Globe

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• Limit foreign banks’ share in

Indonesia and instead promote

the principle of reciprocity

• Special banks for farmers and





Economic Reforms

• Construct sea toll roads

• Irrigation dams

• Promote industrial development

for plantation owners and

midsize businesses


• Reevaluate FTAs

• Manage food imports

• A revision of oil and gas laws

• Restrict outsourcing in state-owned


• Streamline business licenses

• Mining operations to benefit local

communities Policy

• Distribution of agricultural lands (9

million hectares) for 4.5 million


• Development and improvement of

irrigation on 3 million hectares of

rice fields

• Construction of 25 dams and 1

million hectares of new agricultural

land outside of Java

• Provide clean water to farmers’

homes with subsidies

• Regeneration of 1,000 villages


• Utilize renewable energy-based


• Improve oil and gas infrastructure

• Achieve national energy security

• Transfer of fuel to gas

• Cut the energy subsidy

Energy Sustainability

• Create 10 million new jobs

• Promote Creative and

Digital industries



• Improve professionalism in

the public sector

• Raise salaries and improve

welfare of civil servants,

military, and police

• Provide universal access to

education with an

Indonesia Smart Card

• Provide free health services

with an Indonesia Health


• Reform public service

through empowerment of

villages and sub-districts

• Reform law enforcement


• Utilize IT for public


• Establish a National

Integrity System


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• Based on the general sentiments of the investor community, analysts deem Jokowi to be market-friendly, earning a reputation as a hands-on leader and problem solver.

• While his party has a nationalist agenda, analysts predict that Indonesia’s need for foreign investment to maintain and accelerate growth will mean that there will be no drastic changes towards greater nationalism. Hence the election rhetoric on nationalism is likely to exceed actual policy action.

• As an example, Taiwan’s Foxconn Technology Group, the world’s largest electronics contract manufacturer and one of the major suppliers to Apple Inc., has made it clear that its chairman is in favor of dealing with Jokowi to bring the company’s giant investment to Indonesia.

• The market and investors are therefore optimistic for the future…

Industry and business outlook

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The presidential inbox: key issues for Jokowi’s first 100 days

Page 14: Indonesia’s New President: What does the future hold?

The World Bank Logistics Performance Index 2014

Indonesia is currently 53 in the word

Transparency InternationalCorruption Perceptions Index 2013

Indonesia ranks 114 globally


Indonesian logistics costs are amongst the mostexpensive in the world. It is 4-5 times more expensiveto ship a container within Indonesia from Jakarta toWest Sumatra (a shorter distance) than it is fromJakarta to Singapore. This gives an idea of the scaleof the problem. The problem is not just confined toroads and ports, however, but other critical areas.Indonesia’s top five international airports, whichinclude Jakarta’s Soekarno-Hatta, are all underimmense strain and have been operating at over100% capacity for some years. A full 15 millionhouseholds have no access to electricity. TheIndonesian Chamber of Commerce (KADIN) statesthat logistics costs in Indonesia have already reachedover 24 percent of total GDP, compared to neighboringMalaysia in which costs are around 15 percent.Globally, Indonesia currently ranks 53 on The WorldBank’s Logistics Performance Index, significantlybehind regional neighbors Thailand, Malaysia andVietnam. All this points to a desperate need forprogress to be made.

Three major issues for business – poor infrastructure, rampant corruption and an uncertain legal and regulatory environment


In 2013, Transparency International ranked Indonesia

114 based on corruption perception by both domestic

and foreign observers. Despite the unfavorable

ranking, Indonesia is one of the few countries in the

Corruption Perceptions Index that shows a steady and

marked improvement, moving 4 places up from a

118th ranking in 2012. The work of Indonesia’s

Corruption Eradication Commission (KPK) has also had

a number of high level successes, including

successfully prosecuting leaders in the current ruling

party and government institutions. Indonesia's free

press has also been fearless in investigating and

raising corruption allegations in the public domain.

However, the cost of corruption in Indonesia from

2001-2009 was Rp 73.1 trillion (about US$7.86

billion). Recently, the Indonesian Corruption Watch

reported that Indonesia lost as much as Rp 7.4 trillion

(US$632 million) alone to corruption in 2013 – this is

probably a very conservative figure.

Regulatory & legal uncertainty

Indonesia’s investment climate continues to beplagued by regulatory and legal uncertainty.Government requirements often compel foreigncompanies to do business with local partners and topurchase goods and services locally. As of 2013,Indonesia’s Investment Law restricted foreigninvestment and increased foreign equity limitationsin sectors such as telecommunications,pharmaceuticals, film and creative industries,construction, horticulture-related businesses, anddistribution and logistics. Over the past severalyears, the Indonesian government has introducedregulatory changes to increase government control inthe energy and mining sectors. The regulatorychanges have raised costs for foreign businessesand questions about the sanctity of contracts alreadyin force with the Indonesian government. Theongoing process of transferring investment-relateddecisions from central to provincial and districtgovernments has helped reduce some burdensomebureaucratic procedures, but also led toinconsistencies between national, regional and locallaws.

The World BankDoing Business 2014

Indonesia ranks 120 globally

Page 15: Indonesia’s New President: What does the future hold?


Investment: As Indonesia pursues the objective of self-

sufficiency, Indonesia has intensified domestic

discussions of a revised Negative investment List.

Industry and business complaints that need to be

addressed include investment uncertainty, with the

recent cancelling of all bilateral trade treaties and the

bungled mineral ore export ban, which has worried

foreign investors. There is still positive interest in

Indonesia as an investment destination though; Ernst

and Young plan on investing $61 billion in Indonesia

over the next 3-5 years, granted “the investment

environment is conducive and welcoming”.

Mining: The industry is concerned with the imposition of

a ban on mineral ore shipments, designed to force

miners to build smelters and processing plants.

Oil and gas: Government Regulation 79, signed in

December 2010, allows the Indonesian government to

change the terms of certain existing production sharing

contracts, while eliminating the tax deductibility of

certain expenses, change the terms and criteria for cost

recovery, and place limits on allowable costs for goods,

services, and salaries. The oil and gas industry is

looking for more collaboration and certainty from the

next government.

Pharmaceuticals: Indonesia requires foreign

pharmaceutical companies to manufacture locally or to

entrust another company that is already registered as a

manufacturer in Indonesia to obtain drug approvals on

its behalf. It also contains a technology transfer

requirement. How the new government will approach

these issues. remains unknown

Foreign ownership:

• Foreign ownership of banks is capped at 40


• Foreign ownership of telecommunication

providers is capped at 65 percent for suppliers of

value-added and mobile telecommunications

services and 49 percent for suppliers of fixed

network services.

Labor issues: The low productivity of the workforce

amid demand for higher wages has increased

tensions in manufacturing based industries. The

minimum wage has increased by 30 percent from

2010 to 2013, the highest in the region, compared

to Thailand’s 14.2 percent, China 8.4 percent,

Vietnam 6.7 percent and Malaysia 3.3 percent.

Indonesia’s labor productivity on the other hand

only grew by 2.8 percent per year from 1980 to

2012, while Thailand grew by 3.6 percent.

Issues for industry: A brief summary

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Uncertainty facing the mining industry

The mining sector is of vital importance to Indonesia, employing millions of peopleacross the country, especially in less developed remote areas and makes asignificant contribution to the country’s GDP and import/export balance sheet,however, it has faced a torrid time of late since the imposition of a mineral oreexport ban and a prohibitively high export tax in January, designed to encourageminers in Indonesia to build smelters and refine minerals in country. This has led toa halt in production and the cessation of shipments. The law though is widelyperceived to have had a detrimental effect and in fact caused miners to rethinkinvestments and the commercial viability of current production. Thousands of jobshave already been cut or are in limbo; predicted state losses amount to $4 billionper year and have put pressure on the rupiah; and rural regional areas have seeninvestment dry up and construction projects grind to a halt, hurting local economiesand regional development.

A key question now is how a Jokowi administration will approach the issue and thesector in general. There are signs that a change in approach is afoot. Jokowi hasannounced that he wants to sit down with the mining companies and otherstakeholders to resolve the problem and put an end to the dispute in order to get thesector going again. Jokowi has articulated a more conciliatory and collaborativeapproach to the industry, stating that he would sit down with all players - industrystakeholders and regulators - to find a solution. Jokowi’s comments have beeninterpreted as a sign that he will reconsider the ban on unprocessed ore exports andmake it easier for firms to build smelters. Economic advisers to Jokowi have alsocriticized the policies of the current administration towards the industry and forcreating the conditions that the sector finds itself in today, reiterating a need foropen exports and government support to create a more conducive conditions forproduction and value added investment.

Whether Jokowi can find a middle ground between creating a more positiveenvironment for foreign mining firms whilst still appeasing those who tend towardsresource nationalism remains to be seen.

Page 17: Indonesia’s New President: What does the future hold?


Revisions to the oil and gas law

Indonesia’s oil and gas sector is another vital area for the country’s

economy, contributing around 8% of Indonesia's GDP and over

28% of national revenues or an average of $35 billion annually.

One of the big needs from the industry will be for the new Jokowi

government to address the current oil and gas law and give more

certainty to investors. The sector currently has ongoing concerns

over contract sanctity, legal and regulatory risks, corruption, land

taxation, cost recovery and renewal of existing production sharing


Indonesia needs $20.1 billion in annual investment – or $201

billion over the next 10 years – to maximize existing and future

production opportunities, an investment level difficult to maintain

without a conducive regulatory environment and strong

government backing that addresses industry concerns and gives

investors certainty over long term, multimillion dollar investments

in exploration and technology. In recent years, the industry has

seen year-over-year production declines with increased costs to

explore essential new technologies needed to maximize existing

projects and bring online new high-risk projects in outlying areas

lacking in infrastructure. A more supportive regulatory environment

from a Jokowi government will therefore be a key ask and

expectation for the sector.

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Cutting the fuel subsidy Indonesia’s rapidly growing middle class are fuel thirsty, with millions of new cars andmotorcycles coming onto the road each year. This is currently supported by an unsustainableuntargeted energy subsidy which mainly benefits richer Indonesian’s and is estimated to cost thegovernment $33 billion in 2014 – around 15% of the state budget (more than infrastructure,health and education spending). It is also the main reason for a growing current account deficitpredicted to be 2.8% of GDP this year. Gone are the 1980s were Indonesia was a leading oilexporter, today it imports oil at an increasing cost. These factors and the heavy burden on thestate budget have led Jokowi and his Vice President, Jusuf Kalla, to declare that the newadministration will cut fuel subsidies in their first 100 days of office.

Cutting the fuel subsidy is not only vital for Indonesia to balance the books, it is also a statutoryrequirement. Currently the law caps the state budget deficit at 3% of GDP, so with the increasingcost of the subsidy and more and more fuel consumption, plus the threat of global oil price risesand rupiah depreciation, the next government will have to cut the subsidy. Alternative optionsinclude cutting spending in other areas, which is equally difficult considering Jokowi has pledgedto increase spending on social issues and improve healthcare and education provision. It wouldalso be detrimental to Indonesia’s overall development and an equally difficult proposition to sellto the electorate.

The next administration will have to approach the fuel subsidy cut with care, as it was increases infuel prices that helped fuel the economic volatility that eventually unseated Suharto and the NewOrder regime in 1998. When current President Susilo Bambang Yudhoyono’s administration cutthe fuel subsidy last year, there was also widespread protests. It is a political hot potato, but anecessity supported by all reputable economists and analysts.

Jokowi has pledged that he will gradually reduce the fuel subsidy over a four to five-year period.Kalla has also said that it would be an economic priority for the new government once they takeoffice in October. Having Kalla as his Vice President will benefit Jokowi, as Kalla is an experiencedpolicy maker and understands the sensitivities involved from when he also served as VicePresident to current President Susilo Bambang Yudhoyono during his first 5 year term in office.

Indonesia’s energy supplies are still fuelled by oil, gas and coal, and the current government andthe next administration will face the major policy challenge of increasing energy supply to keepup with demand – energy consumption is expected to rise by almost 30% by 2020. Support forfossil fuel burning power stations, especially coal, is still strong; the outlook for other energysources, such as geothermal and renewables looks less certain.

Image: basibanget

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ASEAN &the ASEAN Community 2015

ASEAN and the upcoming ASEAN Community 2015 will present anenormous opportunity but also an enormous challenge for Jokowi andhis administration. It is also of note that the success of ASEAN isintrinsically linked to Indonesia’s willingness to lead and participate.ASEAN is a political and economic organization made up of 10Southeast Asian countries, but Indonesia is critical to its influence andrelevance, as the biggest country, biggest economy and biggestpopulation in ASEAN. How far Indonesia is prepared to work with thegroup really does set the pace for ASEAN integration and its future.

Jokowi has been generally favorable in his public statements to theASEAN Economic Community, stating that Indonesian companies mustcompete to gain a bigger regional and international market share. Hesaid the best way for Indonesia to compete in ASEAN and takeadvantage of the opportunity was for the government to supportenterprise and ‘protect’ local business by further empowerment throughexpediting licensing procedures and administrative processes so thatIndonesian businesses would be better placed to compete. However,Jokowi will be acutely aware of the sensitivities and concerns thatIndonesian businesses (especially Small and Medium Sized Enterpriseswhich employ the majority of the population) have over allowing foreigncompanies greater market access to do business and sell goods. It isunlikely that he would change track in any fundamental way from theway the Indonesian government currently engages with ASEAN; someprotectionist measures will remain in place – especially in sensitivenational industries, such as banking and finance.

We know as well from the Edelman Trust Barometer 2014 results forIndonesia that only 1 in 20 Indonesians want their government to focuson creating free and open markets (that’s much lower than the globalaverage). Opening up markets further still is unlikely to be a particularlypopular policy, although a middle ground maybe found. It is also worthnoting that even if politicians speak in nationalistic tongues at home, theregional and global reality means further ASEAN integration andconnectivity is set to continue. ASEAN political and business leaders willbe looking to see how Jokowi addresses the issue and the choices hemakes in the months ahead.

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Making universal healthcare a reality

Jokowi has recognized that Indonesia faces two major problems: education and health. As part of

his strategy and campaign promise, Jokowi has reaffirmed his commitment to provide free

universal health care and education for all residents. Dubbed the Indonesia Health Card, i.e. Kartu

Indonesia Sehat or KIS for short, it aims to provide greater access to medical checkups and

treatment for underprivileged residents. Free healthcare may also lesson the negative political

impact that will come with his promised cut in the fuel subsidy, which will inevitably cause some


On the issue of the health card, many skeptics have argued that KIS would conflict and overlap with

the current Social Security Agency system, i.e. Badan Penyelenggara Jaminan Sosial or BPJS for

short. In fact, Jokowi states that KIS would strengthen and refine the programs of BPJS, in which he

explains that KIS is merely an extension of BPJS. With the BPJS card, it is region-determined based

cover depending on where the card was issued. The KIS program will utilize the e-KTP’s (national

identification card) database to ensure true national cover. The government will bear the cost for

the wellbeing of Indonesia’s poorest citizens. The cards will guarantee Indonesian citizens receive

health care, regardless of economic status. If implemented effectively and in full this could well be

transformative for Indonesia – on par with the introduction of truly universal healthcare at the point

of delivery and the birth of the NHS in the UK.

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Improving education

Jokowi has promised to implement free universal education up to 12 years old and put an

end to parent’s worries that their children cannot receive basic education due to financial

constraints. Similar to KIS, the Indonesia Smart Card, i.e. Kartu Indonesia Pintar or KIP, aims

to provide universal education for all citizens, including farmers, fishermen, laborers, and

people with disabilities.

In order to improve Indonesia’s overall human resource quality, Jokowi also aims to also

launch the Indonesia Smart Card, i.e. Kartu Indonesia Pintar, or KIS. (The only difference

between the KIP and School Operational Assistance, i.e. Bantuan Operasional Sekolah or

BOS is that KIS uses a card system which makes it clear who receives free education.)

Jokowi’s love of the smart card is based on his success as Governor of Jakarta and his

introduction of similar cards for health and education access, which proved to be highly

effective and popular.

Jokowi has also pledged to provide scholarships for students to continue higher education

who currently cannot afford this due to financial constraints, yet score highly in academic

tests. Health and education are likely to be central areas of focus for the next administration

and are where some of their most ambitious pledges have been made.

Page 22: Indonesia’s New President: What does the future hold?

An introduction to our

Corporate & Public Affairs


Page 23: Indonesia’s New President: What does the future hold?


Our Corporate and Public Affairs practice in Indonesia

Edelman Indonesia offers a full suite of corporate PR and public affairs expertise

The Edelman CPA Practice

dedicated professionals including former journalists, policy and

industry specialists, crisis and issues counsellors, lobbyists and

market entry communications experts30+Corporate


& Strategy





Community & Employee



Engagement &

Public Affairs

Crisis & Issues


Page 24: Indonesia’s New President: What does the future hold?


Core public affairs services to understand Indonesia’s new government

- Stakeholder mapping

- Issues, policy analysis and briefings

- Policy monitoring

- Risk assessments

- Government relations and engagement

- Coalition building and campaigns

- Corporate reputation and public visibility

- Crisis and issues management

Page 25: Indonesia’s New President: What does the future hold?


A selection of our clients…

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Our Senior Team

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Stephen has almost two decades of international experience in public affairs including risk and stakeholder mapping; engagement; legislative lobbying and government relations. Having lived in emerging markets for over a decade, before joining Edelman in South East Asia, he was Managing Director, Eurasia and Global Co-head of Public Affairs for the world’s other large independent PR firms. He has lived and worked in the UK, Brussels, Italy, the Caribbean, Russia and Turkey, before moving to Indonesia. He travels widely on client government and stakeholder management projects across South East Asia. His sector expertise includes oil and gas; banking; disease awareness and education; and pharma market access and pricing. In several countries he has led teams on competition, intellectual property and privacy issues and handled projects around foreign direct investment.

He has co-drafted legislation and advised on national parliamentary enquiries and EU investigations. He has responded to political-driven media and consumer crises with programs integrating government relations, PR, social media and stakeholder outreach. He has managed and co-authored research ranging from retirement income funding; carbon emissions trading; the economic impact of Hepatitis C; smoking cessation; consumer goods pricing and financial regulatory reform. He writes, trains and lectures regularly. Stephen graduated in Law from Cambridge University and 1995-1997 advised the UK’s Labour party on business relations for the 1997 General Election. He started his career as an investment banker at Lazards and has professional accountancy and London Stock Exchange qualifications.

Stephen LockCEO Edelman Indonesia

& Head of Public Affairs, Southeast Asia

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Bambang ChriswantoVice Chairman and Head of



Bambang has over 18 years of experience in public relations, strategic communications, organization development and executive training. For more than eight years with Edelman, he has provided communication and media counsel to CEOs and management teams from many corporations in various industries, including the public service sectors.

In addition to his work experience in public relations consultancy covering such key areas as Crisis/Incident Management, Employee Engagement and Social Engagement, Bambang gained extensive experience in stakeholder management and public relations when he worked as senior corporate affairs managers with Caltex (currently known as Chevron Pacific Indonesia), Coca-Cola Bottling Indonesia, and BHP Billiton.

In his current position, Bambang provides communications and strategic counsel for all practice groups of Edelman Group of companies in Indonesia across many industry sectors. He is also the program director and one of the lead trainers in media skills/spokesperson development programmes, behavior change communications, and crisis management.

Bambang holds a bachelor’s degree in English linguistics from IKIP Malang in Indonesia and later attended graduate studies in communications management from the University of Indonesia. Bambang has an MBA degree in Strategic Management from Prasetiya Mulya Business School, one of the leading business schools in Indonesia

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Jake Drake brings to the firm more than 20 years of strategic communications experience in corporate brand and reputation management, social responsibility and crisis and issues management In Indonesia Jake has led communications initiatives involving a wide range of issues critical to the global reputation and continued economic development of Indonesia and its leading companies. That includes work on social, environmental, fair trade, and economic development issues in partnership with the Indonesian Ministry of Trade and Ministry of Forestry, the U.S. consulates, Indonesian chambers of commerce, and business support associations in Australia, North America and across the EU, as well as private companies such as NALCO, the U.S.-based leader in clean water technology, and Singapore-based Carbon Conservation, an environmental consulting group promoting worldwide investment in REDD and REDD+ programs in Indonesia.

Jake has worked in a wide range of industries, including pulp and paper, forestry, oil and gas, energy services, commercial real estate, professional and financial services, health care, transportation, telecom, consumer and enterprise technology, mobility, and new media/entertainment.

In Asia he led regional communications strategy, CSR and social media campaigns for Sinar Mas Forestry and Asia Pulp & Paper, Dell, ExxonMobil, Paul Capital and Bacardi Brands as well as country-specific initiatives for Merck, Pfizer, Pepsi Co., Unilever, Hilton, the Women’s Tennis Association and Sony Pictures Home Entertainment. Other past clients include Shell Oil, Starbucks, Sony Pictures, Sony Ericsson WTA Tour, Pioneer Electronics, RadioShack, Mattel, Sony Ericsson, THQ, Paramount, Fox, Genentech, Medtronic, British Airways, Del Webb, Pulte Homes, Lucent Technologies and Illinova Energy Partners.

Jacob DrakeHead of Corporate and Public


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Arwan Shah Bin Ismail (Aeran)

Corporate and Public Affairs Director

Aeran is a Singaporean that has been based in Indonesia for the last 12 years. Holder of an undergraduate degree in Network Computing from Monash University, Australia, he specializes in Crisis Communications and in the Lobbying of Regulatory Affairs in the Technology practice, and he is also fluent in brand and social media engagement. Aeran has been involved in conducting training for C-Suite executives and Senior Managers on Media Communications, Crisis & Issues Management and Change Management.

His career began 11 years ago as a Technology and New Media Project Consultant for Hill and Knowlton in Melbourne where he worked for 3 years, before moving on to Microsoft Vendor (Raffles Consultancy) where he took on the role of Sales/Public Affairs Director in 2004.

During his tenure with Microsoft, Aeran helped the company in integrated digital communication strategies and drove strategic online marketing campaigns to engage consumers. He also spent a good amount of time training senior government officials on I.T. Infrastructures, Evolution of Technology and Technology Divide, Intellectual Property and Data Centers to create awareness amongst legislators on the importance of the need for governments to be at the forefront of technology.

Aeran has represented Microsoft (Indonesia and APAC) both in the U.S. and in the Asia Pacific region for their Educational and Innovation programs and the implementation of them with various ASEAN Educational bodies. Aeran has also successfully overseen executive training and counseled representatives from Acer and INTEL Indonesia.

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Stephen Lock,

CEO Edelman Indonesia

& Head of Public Affairs, Southeast Asia

Email: [email protected]

Phone: +62 21 721 59000