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President Susilo Bambang Yudhoyono’s First Year’s Administration

 

When President Susilo Bambang Yudhoyono (SBY) took the oath of office on October 20, 2004, as Indonesia’s sixth president, there were high hopes of change in line with his campaign promise to improve living conditions.

President SBY and Vice-president M. Jusuf Kalla (MJK) were voted into office in a direct election, the first ever held for this purpose. They beat their rivals, incumbent President Megawati Soekarnoputri and Hasyim Muzadi, by a margin of 60.62%: 39.38%.

President SBY fully realized that his administration had inherited huge problems as the result of the 1997 crisis, which the past government of President B.J. Habibie, Abdurrahman Wahid, and Megawati Soekarnoputri had not succeeded in fully resolving. Among these were maintaining the territorial integrity of the unitary state of the Republic of Indonesia (NKRI: Negara Kesatuan Republik Indonesia) against disintegration arising out of more than thirty years of insurgency by the so-called Aceh Freedom Movement (GAM: Gerakan Aceh Merdeka) and the Papua issue. Law enforcement was in need of significant improvement, and there was the huge and complex economic-financial –social problem, perceived by many as a kind of vicious circle. The debt burden, which had reached some Rp. 1,200 trillion (Rp. 580 trillion foreign plus Rp. 620 trillion domestic debt), had reduced the state budget by Rp. 60 trillion on debt-interest payments alone and was compounded by ever –increasing domestic fuel subsidies and other international obligations. There were heavy challenges in the economic field, such as a low rate of investment, poor state of infrastructure, and low growth rate, which hindered economic growth, the eradication of poverty, and reducing unemployment which totaled more than 10 million people in 2004. The people are still waiting for the SBY-JK duet to fulfill the promises they made during the presidential campaign for a better Indonesia.

In the political field, President SBY’s administration has made progress. The Acehnese's problem appears to have been solved with the signing of a memorandum of understanding with the Aceh Freedom Movement on peace in Aceh, while the Papua question is being gradually and peacefully settled through special autonomy for Papua.

In the field of foreign relations, President SBY has been successful in keeping ASEAN cooperation as the cornerstone of Indonesia’s foreign policy and instruments for peace. His state visit to Australia improved relations and cooperation with Indonesia’s southern neighbor.

Security problems, generally speaking, have become more or less conducive, particularly with regard to the situations in Ambon and Central Sulawesi, but the danger of terrorism continues to exist. As evidenced by various bomb blasts—twice in Jakarta (in front of Mariott Hotel and the Australian embassy) and a second series of Bali bombing in Kuta and Jimbaran on October 1.

Concerning law enforcement, particularly in efforts to eradicate corruption, important steps have been taken. These include the formation of the Commission for Eradicating Corruption (KPK: Komisi Pemberantasan Korupsi), the setting up a Coordination consisting of elements of the attorney-general’s office, the police, the State Audit Body (BPK: Badan Pemeriksa Keuangan), and special Court for Corruption Cases. President SBY has said that he himself will supervise efforts to eradicate corruption.

Many corruption cases have been handled by law-enforcing apparatus, (police, attorney-general’s office, KPK) and some have been brought to trial and the guilty imprisoned. Governors, district regents, and members of regional Houses of Representatives have been involved. An extradition treaty with Singapore is being negotiated and was reportedly due to be signed before the end of 2005, which is being perceived as one of SBY’s major achievements because Singapore has for many years used the argument of different legal systems to refuse an extradition treaty with Indonesia. In the meantime, many of Indonesia’s big corruptor’s have found safe haven in Singapore where they are out of the reach of Indonesian law.

Law enforcement is also having difficulty with the plundering and stealing of national assets (illegal logging, illegal fishing, stealing and smuggling abroad of fuel) as a result of which these illicit businesses continue to flourish.

Government efforts to tackle the problems in the aftermath of the big earthquake-and-tsunami natural; disaster of December 26, 2004, in the province of Aceh, causing some 150,000 people to lose their lives and more than half a million others to lose their homes and belongings, and another big earthquake that hit Nias island off the west coast areas North Sumatra, short term and long rehabilitation and reconstruction, including relocation from disaster-prone coastal areas is seen as a plus on SBY-MJK’s administration’s one-year record. In solving social problems.

Both President Susilo Bambang Yudhoyono and Vice-president M. Jusuf Kalla have personally endeavored tirelessly to attract foreign investors to take part in Indonesia’s development efforts, particularly in the infrastructure sector. In January 2005, an infrastructure summit was held in Jakarta, with the government putting large-scale infrastructure development for a period of five years to come on the investment table. This included the development of railway systems, construction of some 1,400 km. To toll roads, improvement of airport and harbor facilities, construction of power plants. The response was positive, although interested investors did ask the government to improve legal certainly on investment and related aspects, resolve the prevailing industrial relation quandary, streamline the bureaucratic system, and keep domestic security problems under control. These issues had already caused some foreign companies to relocate their plants to be more conducive neighboring countries, such as Malaysia and Vietnam. Indeed, Malaysia and Vietnam are strong competitors for investment.

In 2005, another factor put an unexpected, extra burden on Indonesia’s economic, financial, and social condition: the steep rise of the international oil price, from about US$ 35 per barrel in 2004 to about US$ 70 per barrel in the first quarter of 2005. The petroleum situation in Indonesia is rather ironical for Indonesia has been OPEC member since its founding, as an oil-exporter. At one time, Indonesia was producing some 1.3 million barrels a day, making oil a mainstay of the national development effort. Today, owing to the rising rate of domestic fuel consumption, while production remains at a standstill, Indonesia is a net oil-importer. In the meantime, the government’s policy has been to subsidize fuel for the domestic market, to give impetus to growing industrialization and keep the fuel price within the people’s purchasing capacity. The common people, rather, it benefits more the rich people. The fuel subsidy has, in fact, not benefited the common people; rather it benefits more the rich people. The fuel subsidy has indeed kept the domestic fuel price down, but it is so much cheaper than the international market price that both crude and refined petroleum are the object of smuggling—out to neighboring countries!

The new development in the oil price has compelled the government to increase the domestic fuel price. The first hike was instituted in March 2005, but the international oil price rose again, forcing the government to raise the domestic fuel price again on October 1—by an average 180%. This was heatedly rejected by the people, particularly with major Islamic and Christian holidays (Idul Fitri, Christmas and New Year) so close. Demonstrations, although peaceful, have been a daily event ever since, particularly in Indonesia’s bid cities. The fuel price hike has also had an impact on monetary and social problems through an increasing inflation rate, a weakening Rupiah, especially against the US dollar, the increasing price of daily commodities and public transportation, and increasing unemployment, which ends in growing poverty. As an example, thousands of fishermen have reportedly had to cease fishing activities because they cannot afford fuel for their boats.

Amidst all this comes the issue of a cabinet reshuffle, particularly to replace the president’s economic team. The first mention of this came from the Young Golkar Generation (AMG: Angkatan Muda Golkar) when it demanded that Golkar be given a greater share in the executive branch of government as a pro-government party in the House, particularly since Vice-president Kalla was elected the party‘s new general chairman. It has been widely reported that on the occasion of Golkar’s anniversary at the end of October 2005, there will be an official party leadership meeting that will determine the party’s official position with regard to the issue of cabinet reshuffle.

It is this kind of demand that has resulted President Susilo Bambang Yudhoyono by promising to make an evaluation of his cabinet’s performance during his first year in office in October or November 2005. We look forward to seeing what SBY new team will looks like.

 

 

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