Author: Sunny Tanuwidjaja, CSIS, Jakarta

The newly formed cabinet under the leadership of the popularly elected Susilo Bambang Yudhoyono (SBY) has been dubbed a ‘return the favour’ cabinet (kabinet balas budi), a cabinet of political mates (kabinet perkoncoan), a rainbow cabinet (kabinet pelangi), and a power/cake sharing cabinet (kabinet bagi-bagi kekuasaan atau kue).

The idioms used to describe the new cabinet convey the three big concerns about the structure of the cabinet. Read the rest of this entry »

Guest Author: Maria Monica Wihardja, CSIS, Jakarta

This post looks at the interaction between economic and political institutions.

A theoretical study of a simple strategic complementary game with private and public information among partially informed agents such as central banks shows that initial fundamentals might give rise to different levels of transparency. Read the rest of this entry »

Author: Hadi Soesastro, CSIS, Jakarta

Climate change is perhaps the most controversial international issue today. The scientific debate on the need to limit GHGs (green house gases) that are responsible for global warming has not ended, but it is no longer the main issue at this point in time. The Declarations of both the G8 and the Major Economies Forum (MEF), held in L’Aquila (Italy) in July 2009, stated the leaders’ agreement [pdf] with ‘the scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed 2 degrees celcius’.

The real issue is how this would be achieved. As of today, the planet is already 0.8 degrees celcius warmer than at pre-industrial time, and the rise in the world’s average temperature has continued to accelerate. Establishing an international climate regime is seen as necessary to deal with this global problem. This effort began with the agreement in 1992 of the UN Framework Convention on Climate Change (UNFCCC) that led to the adoption of the Kyoto Protocol in 1997 and its entry into force on 16 February 2005.

Read the rest of this entry »

Author: Jusuf Wanandi

On July 17, 2009, the Canberra-based Australian National University (ANU) conferred a Doctor Honoris Causa degree in economics on Hadi Soesastro. He is the third Indonesian to receive such a degree, following the conferrals many years ago to Dr. Masri Singarimbun, a demographer, and Dr. Thee Kian Wie, an economic historian.

Dr. Singarimbun was honored for his achievements in the field of demography, and for paving the way for Indonesian students to study at the ANU. Dr. Thee was honored for his long standing and extensive cooperation with the university.

The ANU honored Hadi for his achievements in promoting the idea of regionalism in East Asia and the Asia Pacific. He has tirelessly developed the idea and given it a conceptual framework through various Track Two processes since it was first proposed in the 1970s. He has been instrumental in developing the Pacific Economic Cooperation Council (PECC) into what it is today, and for the establishment of the Economic Institute for ASEAN and East Asia (ERIA). In addition, he is appreciated for his contribution to Indonesian-Australia relations, especially in economics.

Read the rest of this entry »

Author: Sunny Tanuwidjaja, CSIS, Jakarta

Quick counts show that Susilo Bambang Yudhoyono and Boediono won the election with a landslide with around 60 percent of support, followed by the Megawati Soekarnoputri-Prabowo Subianto pair with around 27 percent of votes, and Jusuf Kalla (JK)-Wiranto winning around 13 percent of votes.

Many have said that SBY’s achievements as president, his charisma, and his style, which are considered by many as presidential, are the key factors in explaining this landslide. However, we should not forget that the result of this election is also a function of the other two candidates.

Considering that the goal of JK and Mega was to make this election go to a second round, we can say that Mega’s team has done their job while JK’s has failed. The failure of JK and his team to get adequate support to push this presidential election into a second round is due to several factors.

Read the rest of this entry »

Author: Hadi Soesastro, CSIS, Jakarta

By now a number of Indonesian polling agencies have perfected their method to do quick counts of the election results. The public has accepted their counts as being close to the official final result. In just a few hours after the closing of the voting booths Indonesians have a pretty good idea of the outcome of an election. This happened on 9 April 2009 with the legislative elections and again on 8 July 2009, the day Indonesians cast their vote to elect their President and Vice President for the period 2009-2014. This is a remarkable development.

The final, official count will be known in only about 10 days to two weeks. But at about 4pm on the day of the election, just three hours after the booths were closed in western Indonesia, it was clear that the incumbent, Susilo Bambang Yudhoyono (SBY), was the winner. By about 6.30pm when the quick counts have covered 90 to 99 per cent of the sample, there was no doubt that SBY and his running mate, the economic technocrat Dr. Boediono, won the election in the first round. There is no need to have a second round like in 2004.

It is a landslide victory. Read the rest of this entry »

Author: Jusuf Wanandi

In about a week’s time, on the 8th of July, the Indonesian presidential election will be held. All presidential contestants have been under intense scrutiny recently including the incumbent vice-president Jusuf Kalla. He had announced in February 2009 that he would not be returning as the running mate of the current President Susilo Bambang Yudhoyono (SBY). Instead, he would be jockeying for the coveted position himself under the covering fire of former military strongman General Wiranto.

Writing about Jusuf Kalla (JK) in the 2009 presidential election is an encore for me because I wrote an op-ed piece for the Financial Times on the 2004 presidential election. I remember my stance on Jusuf Kalla then was negative because there was popular belief that as a student activist, he was behind the burning of churches in Makassar in 1967. That is how he was branded as being anti-Christian.

Kalla inherited and developed the family business after the demise of his father, Hadji Kalla; and as a businessman he inevitably had to compete with other businessmen, be they Chinese-Indonesian or foreign. It was then that he was branded anti-Chinese and anti-foreign.

However, my view of Kalla gradually became positive because of the role he played in resolving the Muslim-Christian conflicts in Maluku (the Malino I Agreement) and Poso, in Central Sulawesi the (Malino II Agreement). He achieved this single-handedly during his time as coordinating minister for the People’s Welfare during Megawati Soekarnoputri’s presidency. Read the rest of this entry »

Author: Hadi Soesastro, CSIS, Jakarta

The Asia Pacific region is fast becoming a core area, if not the core area, in the international system. A new regional architecture is required to help frame the cooperation with the Asia-Pacific core as well as shape regional strategies towards global issues. As a soon to be released PECC report suggests: ‘So long as the multilateral architecture fails to incorporate Asian economies in a manner central to systemic issues, these economies will remain secondary players on global issues and sometimes even regional issues. The world cannot afford this.’

The need to reassess Asia Pacific’s regional institutional architecture has been under discussion at the Pacific Economic Cooperation Council (PECC) since 2006. A PECC Task Force will publish a report on the subject within the next month. The relevance of this exercise was underlined by Australia’s Prime Minister, Kevin Rudd, in his address to the Asia Society AustralAsia Centre in Sydney on 4 June 2008, when he suggested a new vision for an Asia Pacific Community. Has the moment arrived for a significant transformation in Asia Pacific’s institutional architecture?

There are four basic functions that a regional architecture needs to address. Read the rest of this entry »

Author: Sunny Tanuwidjaja, CSIS, Jakarta

Susilo Bambang Yudhoyono (SBY), the incumbent and the front runner in the coming presidential election, has choosen Boediono, the current Central Bank Governor and a highly skilled economist, as his running mate.

Some question Boediono’s nationalism because of his close relationships with foreign donors and investors. Others question his ability to represent the aspirations of the Muslim majority.

However, no one questions his good fortune. Pairing with SBY makes him an almost certain choice as Indonesia’s vice president for the next 5 years.

Read the rest of this entry »

Author: Sunny Tanuwidjaja, CSIS, Jakarta

If politics is truly the art of the impossible, in the last several days we have seen politics at its best in Indonesia. We have heard statements turned upside down. We have heard many promises made. We have seen political commitments broken. We have seen long time foes become friends, and long time friends become foes.

This political circus should not come as a surprise in this season of coalition building as the Indonesian presidential election approaches.

The acrobatic political manouevres show that the coalitions that will emerge in this next few days will be politically pragmatic in nature. Coalitions are established to fulfill at least three major political purposes. The first is to enable political parties to put forth a presidential candidate. The second is to consolidate and secure support to win the presidential election. The third is to secure support from the parliament for the elected president in the aftermath of the election.

Read the rest of this entry »

Author: Sunny Tanuwidjaja, CSIS, Jakarta

The three democratic elections after the New Order era clearly attest to the changing political landscape in Indonesia. On the one hand, new parties continue to emerge. On the other hand, we observe the stagnation and steady decline of the old political parties, Golkar, Megawati’s PDI-P, and PPP, the most established Islamic party.

Take the 1999 election. The new parties, PKB (led by Gus Dur) and PAN (led by Amien Rais), were then the rising stars, garnering 19.7 per cent of the votes, and 18.3 per cent of the seats. In the 2004 election, it was another two new parties, PKS (the militant Islamic party) and the PD (established by SBY), who were on the rise. These two parties combined collected 14.7 per cent of the votes and 18.2 per cent of the seats.

The previous newcomers, PKB and PAN, stagnated. In 2009, the biggest surprise is the overwhelming rise of PD. Based on several quick counts and the official General Election Commission (KPU) count that is still in progress, PD will emerge as the largest party, garnering 20.5 per cent of the votes. Two other newcomers will also enter the parliament, and between them, Gerindra (established by Prabowo) and Hanura (formed by Wiranto), garner about 8 per cent of the vote.

Read the rest of this entry »

Author: Hadi Soesastro

The top priority of the London Summit will have to be placed on cleaning up the global financial system. This has become crystal clear as various other measures taken at the national and global levels have brought about only meager results. But keeping global trade open must be given a prominent place in the Summit’s agenda. And leaders must go beyond airing the right rhetoric, which many did. Concrete actions, which remain wanting, must follow.

Global trade has already shrunk and will continue to do so unless real actions are taken. In fact, trade could become a fundamental part of the solution to the global economic crisis. Concluding the Doha Round could amount to a significant global stimulus package resulting from a trade deal. But most importantly, it could help reverse the growing economic nationalism that is manifested in various forms of trade and financial protectionism.

Read the rest of this entry »

Author: Hadi Soesastro, CSIS, Indonesia

East Asian members of the G20 must participate strategically in this emerging global forum. They need to make sure that the G20 can produce policies and actions that will help bring the global economy out of the current crisis as soon as possible. Existing international institutions have been helpless in dealing with the issues the world now confronts and are in dire need of major reforms. There is now no better forum than G20. Essentially, it will act as a ‘steering committee for the world economy’, as Barry Eichengreen aptly said of the G20, and this forum should now replace the G7 or G8 for good.

Yet the G20 is still very fragile. In part, this is due to its ad hoc nature. But it also suffers from problems of legitimacy in respect of how its membership is being determined. The problem has deepened with the inclusion of a few additional participants at the coming London Summit: why they and not others? The European members of the G20 are facing the greatest challenge from fellow Europeans on this issue although the EU already has a seat at the table. 

Read the rest of this entry »

Author: Alexandra Retno Wulan, CSIS, Jakarta

As the first African-American to hold the office, the inauguration of President Barack Hussein Obama is a historic moment, and the beginning of a new era for the United States.

His personal background has tied a linkage between President Obama and the world outside of the United States of America. He has raised the hopes of millions at home and abroad, including many Indonesians.

People around the globe expect that Obama will bring significant changes to the US and the rest of the world. Many Indonesians are even more optimistic that Obama will strengthen Indonesia-US bilateral relations, as he spent four years of his childhood in Indonesia.

What, exactly, does Barack Obama intend for the Indonesia-US relationship? Based on President Obama’s inaugural speech, which highlights some of his policy goals, we can expect the following.

Read the rest of this entry »

Author: Jusuf Wanandi, CSIS

Congratulations to the United States. For the first time in more than 230 years of American history, an African American, Barack Obama, is installed as president of the United States. All Americans should be proud. There is so much euphoria, and so many expectations have been placed on president Obama’s shoulders. This is not only the case in the United States, but all over the world. This pressure has been building since he was elected last November.

The problems and challenges that Obama now faces – including the economic recession, wars in Iraq and Afghanistan, the Palestine-Israel conflict, Iran and North Korea’s nuclear proliferation, social security and healthcare issues — are tremendously difficult and complicated.

Read the rest of this entry »