New Ash Center report lauds successes, proposes reforms for Indonesia

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Formerly an authoritarian state, Indonesia has made impressive gains over the last 10 years as the world’s first majority Muslim, multi-party democracy. The country’s successes and challenges as a new democracy are the subject of the new report titled “From Reformasi to Institutional Transformation: A Strategic Assessment of Indonesia’s Prospects for Growth, Equity, and Democratic Governance.” The report, authored by the Rajawali Foundation Institute for Asia of the Ash Center for Democratic Governance and Innovation at the John F. Kennedy School of Government at Harvard University, offers an assessment of Indonesia’s governance and socioeconomic climate, and concludes that the country must move beyond current reforms to effect a dramatic institutional transformation in order to compete successfully in the global economy.

Indonesia’s current economic and social conditions are described in the beginning of the report. It documents the nation’s struggles with inequality, corruption, and institutional failure, and outlines the many economic challenges that it faces, including a growing trade deficit with China, the continued exporting of its natural resources and the importing of many finished goods which could be produced domestically. According to the report, slow job growth coupled with inadequate infrastructure and public health services impede Indonesia from achieving its full potential.

Recommendations for Reform

The report’s authors contend that the following short- and medium-term measures could set Indonesia back on the right course toward a path of prosperity:

  • Electoral Reform: Indonesia’s current election processes vary across the country and are often plagued by corruption. Solutions like creating a single-member district (SMD) system and semi-closed list voting processes, or adopting Germany’s mixed SMD and closed-list system, could reduce the complexities and thus curb some corruption, incentivizing politicians to act more in the public interest.
  • Adopting International Standards: China has had much success attracting foreign business by adopting international standards of accountability and transparency while involving international executives and board members. By following China’s example, Indonesia could make a stronger commitment to international rules and halt business-as-usual practices influenced solely by domestic interests.
  • Reforming Decentralization: While decentralization has increased avenues for democratic participation, its speed and lack of coherent functions threaten to undermine its civic benefits. The report calls for inter-governmental review bodies, such as the Council for Deliberation on Regional Autonomy, to improve efforts in overseeing and coordinating decentralization. Creating a clear set of standards and criteria for the establishment of new administrative entities could provide much needed consistency and accountability of functions.