 Distinguished guests, ladies and gentlemen, colleagues, students, good morning and welcome. I'm Veronica Taylor. I have the privilege of serving as the Dean of the College of Asia and the Pacific here at the ALU. Before we begin formally this morning, I'd like to acknowledge the traditional owners of the land upon which we meet and we pay our respects to the elders of the Ngunnawal people past and present. I'm really delighted to officially welcome you to the 33rd Annual Indonesia Update Conference. It's remarkable that we've had an event of this quality and depth continuing since 1988 and attracting scholars, activists, government officials and students from all over the world. Later in the day, we'll be joined by His Excellency, Ambassador Mr Najib Rifat Kasuma and we have with us already this morning many speakers and participants who've travelled great distances to be here. Thank you very much for joining us here for the update. I want to also extend a very warm welcome to our keynote speakers, Professor Nancy Lee Paluso from UC Berkeley and Dr Adrian Bedner from the Van Bollenhoven Institute at Leiden University. As you know, this year's theme is land and development in Indonesia, searching for the people's sovereignty. And we're delighted that the meeting is being co-convened by two anthropologists, Dr John McCarthy from the Crawford School of Public Policy here in the College and Professor Kathy Robinson from our School of Culture, History and Language in the College. So the theme of the update is land and development. Rural development, food security and land reform are high on the agenda of Indonesia's new administration. Some development experts argue that resolving land tenure problems can support investment in land and increase the productivity and the efficiency of resource use. However, in Indonesia infrastructure development continues to be blighted by unresolved problems of land registration, titling and formalisation. At the same time, key questions remain regarding how to recognise customary rights and reform the governance of forestry and mining. Why has land reform been so difficult in Indonesia? What can we learn from the history of Indonesia's land titling programs? What lessons from elsewhere can Indonesia draw on to resolve these problems? The 2015 Indonesia update will examine land law and its administration in decentralised Indonesia from land acquisitions in Pakua to asset ownership in the villages of Sulawesi and Java to the tenure conflicts associated with the oil, palm and mining booms in Kalimantan and Sumatra. We have papers that will consider Indonesia's many land challenges and presenters will also examine the environmental implications of land management. It's going to be a rich and varied Indonesia update and I really wish you a terrific couple of days engaged in deep analysis and really intense and robust debate. Before I close my remarks, I want to acknowledge with thanks the continuing support of the Australian Department of Foreign Affairs and Trade which has been a long-standing partner, collaborator and supporter of the Indonesia Update project. We appreciate that very much. I also want to acknowledge with great thanks the hard work of our two conveners and all of the Indonesia specialists here at ANU who have collaborated through the update and through our Indonesia project to create a forum in which you can have the rich kind of discussion that will follow in the sessions today and tomorrow. And with that welcome, I officially open the update and pass to my colleague Dr Marcus Metzner to convene the first session. Thank you. It's a great tradition of the Indonesia Update conferences that it begins with the political update of the year and this year will be no exception. Last year, my colleague and I at Espanol explained to you how Jacoby won the presidential elections of 2014. Turns out that was the easy part. And for today, I'm quite relieved, in fact, that the task of explaining to you how he did in his first year is not falling to me, but in fact to my two colleagues, to my left. We have two fantastic speakers today, both of whom are members of the upcoming generation of political scientists on Indonesia. Both are PhD candidates at the Department of Political and Social Change at the Bell School here at the ANU. We will first hear the main talk about political update events from 2015 from Burhanudin Muhtadi. Most of you, the Indonesians, of course, will know him as a very prominent media commentator. He's also a member and a leading member, in fact, of two polling institutes. One of them is LSE and the other one is Indikator. He is currently writing his PhD thesis here on vote buying in Indonesian elections. After that, we will hear from the discussant, Chief Warburton, who is, as I said, also a PhD candidate at the Department of Political and Social Change. She is researching the issue of resource nationalism in Indonesia. She has published widely. She has edited, in fact, special editions of Inside Indonesia, and she has also contributed widely to New Mandala and other widely read blogs. So without further ado, we will first hear from Burhanudin Muhtadi for 40 minutes, and then from Chief Warburton for 10. Please welcome Burhanudin Muhtadi. Thank you, Marcus, for your introduction. Thank you, everyone, for your coming. Thanks, Babudy, from the A&U Indonesia project for giving this opportunity to speak. I spoke to Babudy last night that it would be more interesting, more exciting to talk about Australian politics now rather than Indonesia. I have been here since 2013, and I have witnessed an Australian head, maybe four, right? Four prime ministers in just over two years. Okay, back to my job. I would like to present my paper on Djokovic first year, a weak president caught between oligarchic politics and reform. This gloomy picture could represent the topic that I will be presenting. So I will start my presentation by discussing the puzzle. Djokovic election rise of hope that there will be change, but it took only a few months for Djokovic to produce unwittingly public disillusionment, some regression in democracy. And then I will look at Djokovic's first year in the context of cartelization and oligarchy theories. Then I will address some challenges that Djokovic is facing. Djokovic's triple minority position. Djokovic facing pressure from party oligarchs. Afterward, I will discuss Djokovic as a political leader and discuss how his personal preference in terms of economy, physical, democratic reform. And then I will frame this in the context of early expectation that people have about Djokovic. Whether the hope in Djokovic was misplaced or there was an element of misreading Djokovic. And lastly, I will review the adjustment that Djokovic has made to look at whether we will be optimistic or pessimistic. Okay, I will remain you all. Last year, last year expectation were high for reform. Unlike previous president Djokovic coming outside the Jakarta power structure, he has no ties with influential families. He has no military background. Djokovic was seen as the product of reformation since he has been able to rise to political prominence through era of decentralization and direct local election. And in terms of campaign strategy, Djokovic introduced a new way of participatory politics while climbing up the top of pyramid by attracting a vast network of volunteers and associated with anti-political party including support from anti-corruption and human rights activists. He was held as a breath of fresh air in Indonesian politics. His victory over Prabowo, Subianto, a Suharto era general with a brutal past was deemed as the decisive victory for democracy. When he was officially inaugurated as president on 20 of October 2014, he promised to bring new style of politics to Indonesia thereby generating optimism among Indonesian that his government would turn to reform. What happened then? It turned out that Djokovic has placed a greater value on real politics over reform. As evident is in his selection of cabinet members his response to the controversy of Pudi Gunawan allegedly corrupt senior police officer and then his handling of attempt of the weakening of KPK anti-corruption agency in Indonesia. He has fallen into the low land of all politics turning him into a business as usual politician who engaged in promiscuous power sharing and backroom maneuvers. So that's why now this picture has been circulated massively since January 2015. This is a cynical remark actually. A part of SBY picture, why you met? It was better in my time, wasn't it? It's like, you know, a mockery. So I will rise the puzzle. The puzzle that I would like to discuss is about why did Djokovic fail to deliver and what has gone wrong with Djokovic in whom so much hope was invested. Let me discuss briefly about the framework. So there are two main ways of explaining Indonesian politics, the problem of Indonesian politics after Suharto-Ira. First is about oligarchitesis and the second is about heartilization. One stressed material power, another stressed political institution. The driving argument behind oligarchitesis despite the Indonesia has enjoyed democratic consolidation since 1998, the post-Suharto government is still controlled by old oligarchic and predatory forces. So according to this school, according to this school there will be no reform because of the interest of the wealthy. And the second cartel approach in the Indonesian contemporary politics has been dominated by a wide spectrum of political parties that collude collectively and then they enjoy the spoil of power after election. So the core feature is ideological stance is not important for making coalitions and then election results may have any effect in making coalitions after the election and no significant opposition in parliament. According to cartel approach, there will be no reform because the power of promiscuous power sharing in making coalitions. So I will argue that despite the power of oligarchy in explaining Djokovic first year in office, some of the events during year one in his presidency were hardly consistent with oligarchy paradigm. At the beginning, there were at least five optimism for Djokovic that would take a progressive reform which contradicts with expectation of cartelization theory. First, rather than building an expansive cartel to campaign for him during last year election, Djokovic just formed a limited coalition. Second, Djokovic promised no reward for the support he received from political parties and elites and emphasized that he was building a coalition with no strings. Attached, so with no condition. Third, prior to his inauguration as president, Djokovic put himself in a bind by promising to reduce the number of ministries in his upcoming cabinet. He also promised that his cabinet would be dominated by non-partisan provisional. And then the 2014 presidential election produced a sharp line between the ruling and opposition parties. And last, prior to announcing his cabinet, Djokovic loaded that his cabinet would be working cabinet, cabinet kerja, symbolizing an anti-cartelist appeal. And this name, of course, was stuck contrast to those Abdul Rahman Wahid National Unity Cabinet, Megawattish Mutual Assistant Cabinet, Yudhoyanas United Indonesia Cabinet, whose cabinet names emphasize broad-based coalition and noons of cartelization. However, the political reality was much stricter. Governing is always more difficult than campaigning. Djokovic was already in triple minority position. First, Djokovic was supported by a government coalition which doesn't enjoy a parliamentary majority. So this mine and party cartel, but the cost for Djokovic, he lose majority coalition in parliament. Second, he remains a marginal figure in his own political party with less authority than previous president. Third, he is a new kid on the block, a complete newcomer to national stage. So this limitation ultimately pushed Djokovic to reward the ruling parties in Oligah who supported him to govern effectively. As a result, Djokovic has embraced the old style of politics, the old style of host trading for prominent posts in the cabinet and other high-ranking positions. So if you look at the cabinet formation, it's clear the cabinet lineup reflected strong influence of Djokovic, of Mekawati, Surya Palloh and Yusuf Kala. Surya Palloh is a head of national party. He is, of course, 100% Oligah. You can see from this picture. So this is just a mockery to show how big Surya Palloh influence on Djokovic face, Djokovic cabinet. So the Djokovic cabinet could be read as the victory of oligarchy theories of cartelization. It didn't meet the strict definition of party cartel because a number of significant political parties were not accommodated in the cabinet. It clearly served the interests of party oligah within his ruling coalition. So in the cabinet lineup, there were 15 party appointees in cabinet, just only 34 to keep his minority coalition. This is not to mention those ministers who were professional or ex-military have no official affiliation with political party but were in cabinet because they were cronies of party oligah. For example, Riyam Zadbiagudu, the defense minister, he is a megawattist confidant. So this chart actually tells something that Djokovic cabinet produced more proof the oligarchy thesis than party cartel. So if you look at the pie chart, Djokovic government just was supported only 37% of the seat in parliament. So after years of being controlled by the so-called party cartel, for the first time, Indonesia established a limited coalition. The slim coalition could basically create a window of opportunity for forming a professional cabinet. Unfortunately, Djokovic was eventually trapped in transactional cabinet, falling in the common practice of trading cabinet as a piecement to his party oligah. He also suffered double loss. He lost a big opportunity to establish a minimum winning coalition, a winning coalition without unnecessary members that could potentially be formed by at least incorporating one or two new coalition partners. And second, Djokovic paid a high price for political support provided by the ruling coalition which didn't have parliamentary majority. So it was striking if we compare between Djokovic cabinet and Eudonus cabinet, those ministers who coming from political parties, it was almost no different between them. Djokovic has 15 political appointees in his cabinet, while SPY has around 17 political appointees. Though paying the same price, Djokovic obtained the support less than 40% while Eudonus received that often oversized coalition, 75%. And after the cabinet announcement, Djokovic seemed to be more dependent to Yusuf Kala, to Megawati Paolo, aside from recruiting their cadre and confidant. In the cabinet, Djokovic also granted greater access to patronage of opportunities. This is another proof of oligarctic style concession. In the case of, for example... Sorry, this one. In the case of Surya Paolo, he was behind the dubious energy deal between the government with Angola. Another clear example of how Djokovic was under the thumb of his own lion when he appointed Megawati's confidant, Megawati's former Eudon, Pudi Kunawan as police chief in January 2015. While in 2010, Pudi Kunawan faced allegations of dubious transaction in his bank account. Ironically, Djokovic refused for weeks to withdraw Pudi's nomination. Even after the KPK anti-corruption agency in Indonesia announced Pudi was under investigation for accepting pride. The Jakarta-based English newspaper Jakarta Post made a headline, Djokovic, a hostage of his own lion. Suggesting that for the president, the enemy to fear is the enemy with it. Facing the prospect of losing his popularity and his image as anti-corruption figure, Djokovic finally cancelled Pudi's inauguration. He reached out for his support to cancel Pudi Kunawan, candidacy, and submitted another alternative for approval from the opposition-dominated parliament. So from this case, it is clear that despite oligarchy interpretation is more successful in explaining Djokovic's government after the election, but Djokovic is not completely tamed by the oligarch. But Rudin Haiti was ultimately appointed as a police chief while Pudi Kunawan was chosen as a second-in-commander police official. However, it was not to be in the end of political drama. It was only its beginning instead. The unexpected nomination had escalated tension between KPK and police. The police then entered the fray naming chairman of KPK, Abraham Samad, as a suspect in the argument for a jury case. So it's a silly case, actually. And then Bang Bang Wujo Yan thought another commissioner was arrested for allegedly instructing witnesses to provide false testimony in trial held several years ago. And Djokovic reluctant to defend the KPK when the police retaliated by charging KPK commissioner was deeply disappointing for the police support that brought him to power. So it is true that SPY was readily known for his indecisiveness, but at least he defended KPK much better than Djokovic. Now, so what happened with Djokovic? So I would like to look at him in personal factors. In addition to pressure from oligarch forces, Djokovic personally lacked leadership on anti-corruption and human rights issues. So his agenda has largely been driven by his focus on economic development. He sees himself primarily as practical men, pragmatic men, who domestically focus more concern with concrete policies at the expense of abstract concepts. His grand ambition related to economic development and social welfare, which according to him constitute an important legitimation for political power. Other sectors according to him, this is just my reading about him, seen as secondary to or an instrument to improve the economy. So Djokovic's concern on democratic reform should be read in the lens of economic perspective. Democratic reform should be put as a mechanism to increase good governance, bureaucratic reform, transparency, efficiency, reducing anti-corruption, reducing corruption and red tape, something that facilitates for the economy. The economy is at odds with the anti-corruption agenda. Djokovic seems to de-prioritize the letter for the sake of economic interest. I can provide you two evidence. First, emit the decrease in the proportion of budget being spent in recent years and an effort to increase government spending following economic slowdown. Djokovic instructed to draft a circular letter containing a guidance for regional leaders on how to avoid activity that could lead to becoming corruption suspect. So he seems to hold the belief that the corruption crackdown in Indonesia is discouraging some official at national and local level from starting new project in instilling fear that they will be blameful or even charged with criminal corruption case. And another example, the dismissal of Pudewa Seiso as the chief of police detective division in just recently. So according to Djokovic, corruption eradication should not be carried out, corruption eradication should be carried out without controversy. So he had to leave his position as the chief cabaret scream allegedly due to police raid and investigation into a major corruption case involving state-owned port operator Petey Pelindo. Djokovic seemingly has no problem with anti-corruption as long as it is having no impact for economy. So another thing about Pudewa Seiso dismissal, actually there is an element of intra-oligarchic conflict within the ruling oligarchy. So if we read the work written by Winters, Hades, or Robinson, there is a tendency that oligarchy is politically homogenous. In fact, oligarchy is not politically and economically homogenous. Pudewa Seiso is Pudikunawan protege close with Megawati and he did investigation on corruption case implicating Pelindo director, Lino, who is readily known as Yusuf Kalaman. It's like intra-oligarchic conflict. So because of his focus on economy, unsurprisingly if we look at Djokovic's policy achievement using Markus Meisner, terminology of technocratic populism, Djokovic has developed narrative based on the mixture between non-ideological pragmatism and social empathy with the poor. That's why high on the list of Djokovic top priorities are investment deregulation. The Djokovic government simplified the existing regulation that burdened investors. He is readily known for removal, fuel subsidy to free fund for development spending. He also good job for pushing infrastructure, railways, toll routes, seaports and facilitating the displacement of village fund again for infrastructure, irrigation bridge route and of course social welfare program, and then smart card. Another characteristic of Djokovic presidency, sometimes Djokovic rhetoric is conflicting with each other. For example, at the time of World Economic Forum in April 2015, he said that please come and invest in Indonesia if you have a problem. Call me, I stand here today to invite you to join me and my people on incredible journey to make an incredible point. Afterward, at a gathering of Asian and African leaders, he took a more strident tone, calling for a new global economic order that was not dominated by Western-led institution, saying that the idea that the world economic problem can be solved only through the World Bank IMF and ADB is obsolete and must be abandoned. I am the opinion that the fate of the global economy should not only be left to those three financial institutions. Another thing, Djokovic presidency also seemed amateurish. In March 2015, Djokovic, I don't read what I signed, became a worldwide trending topic on Twitter after the president admitted that he had signed off on controversial regulation without reading it. Another photo, this photo was taken during the welcoming ceremony for Turkish president Tayyip Erdogan during his visit to Indonesia this year. Just look at his leg, Djokovic's leg. This photo was circulated on Twitter, symbolizing Groovy. So, yeah, it's very clumsy. And then having said all of this, has Djokovic another price to pay for rewarding his party oligarch? Clear based on this data, based on face-to-face interview, we can see Djokovic eroding support from the public. A recent survey conducted by SMRC discovered that Djokovic's approval rating was at its lowest app since he took office 2014. So, a nose dive from 62% before the Putikunawan affairs took place in January. So, some supporters of Djokovic also starting to become dissolution with their champion. You can also compare between Djokovic's approval rating and Yudhoyono in their first year in office. The survey also found that Djokovic's approval rating was far more behind that of former president Yudhoyono in first year of his two-term presidency, which stood at 70% and 66% in her first term approval rating in 2005 and his second term in 2010, respectively. It's clear the level of dissatisfaction toward Djokovic was higher than the level of satisfaction rating. Commonly, in Indonesian case, presidents still enjoy honeymoon period with the public in their first year in office. So, this is not the case in Djokovic. His honeymoon period is truly over and his own lion, sadly speaking, contributed for the ending of his honeymoon period. Just to look at how the public perceived economic condition, just look at the red line indicating much worse. There was a big jump in the red line. So, this survey in July 2015 was conducted just after presidential election. So, everything was good at the time. But now, one year after that, at the time in July 2014, just only 16% of respondents saying the economy at the time was worse, now 31.5% saying the economy had even worse since Djokovic took his presidency. And then this one is about Indonesian political condition according to the public. 37.5% of respondents believed that the current political situation had deteriorated under Djokovic's watch. Again, look for red line indicating bad condition. There was a big jump in the red line. In July 2014, respondents who believed that political situation was bad, only 19, but now there was significant increase in the public bad perception of political condition. I love this draft. It reminds me Tony Abbott. Yeah, poor Tony Abbott. If he were Indonesian president, he would not be removed by politicians. So, despite a majority of voters saying that they were dissatisfied, disapproved with Djokovic's performance, approximately 98% of voters who believed that Djokovic should not be removed from office before 2019 election. Only 13.2% of voters survey believed Djokovic should be removed before 2019. So, the results indicate that Indonesian want the performance of Djokovic to be improved while simultaneously maintaining constitutional political process. So, this is about adjusting the ruling formula. I have provided strong evidence why optimism turned into skepticism to Djokovic. If I had given this presentation two or three months ago, I would have gone to excessive pessimism. But recent development about adjustment Djokovic has made to ruling formula quite promising. So, he has begun to balance ruling and opposition parties in a way that benefited him. However, of course it takes to tangle Prabowo seemed to adjust his strategy as well to leaning toward unconfrontational approach when dealing with the Djokovic government. There are several reasons behind the move of Prabowo. First, Prabowo may realize that the public is not generally in favor of radical opposition. And second, Prabowo played nice and softened his opposition because in reality he could only control his own party, Keryndra and Pikaes. Pan was completely out of Prabowo's radar since the new chairman Yul Kifli Hasan took office in May 2015. The strength and solidity of opposition parties has basically weakened since Golkar and PPP experienced internal rift. Note that Yudhoyanos' Democratic Party is not officially opposition, which allowed Democratic Party to maneuver in any direction. And third reason, Prabowo may be caught in his own promise to be a Democrat. If Prabowo wanted to maintain his chance in 2019 election, he should be more patient. And lastly, there was speculation that a short deal had been reached. So this suspicion seems to be confirmed by a close-door meeting between Djokovic, Prabowo and Abu Rizal Bakri ahead of DPR planarization to pass 2015 state budget. So the concession was allegedly linked to Prabowo's Kiani Kertas, one of Prabowo's company that has been experiencing financial difficulties. But the evidence is much clearer in the case of providing concession to Abu Rizal Bakri, who was able to secure loan from the government in order to pay compensation to victim of much bill triggered by one of Abu Rizal Bakri companies in 2006. Just to give you an overview about complex power struggle. This is how mass media portray complex power struggle. So it's time to remember that no one should expect Djokovic will govern with ease, given complicated political context that he and his team are operating in. So he reached out to Prabowo to look for support. And then another recent development of his consolidation of power base is about more Japanese approach to Megawati. So previously there was a love and hate relationship between Djokovic and Megawati, making PDIP as the biggest shareholder of Djokovic's government has been engulfed in complicated relationship with state police. Apart from the Pudi-Kunawan case, Djokovic refused to dismiss Luhut Panjeitan and Rini Sumarno, both ministers, despite Megawati's mounting pressure on Djokovic to remove them from office. However, Megawati cannot deny the fact that it is only Djokovic who is able to end PDIP's long way to become the ruling party, love and hate relationship. But the relationship between Megawat and Djokovic cannot fully explain in the lens of oligarchy perspective. So unlike Yusuf Kala, Prabhu Aburi Zalpakri, or even Surya Palok, Djokovic had given non-oligarchic style concession to Megawati. And Megawati is not completely oligarch. Winters call her as a hidden oligarch. So Djokovic used cultural approach to tame Djokovic. Djokovic is kissing the hand of Megawati, showing his respect to her, inviting her to come at a state ceremony event like this photo, for example. Djokovic invited Megawati and Puan to take historical walk along with Asian-African leaders and head of state to bring some of Megawati's confidant in his governmental post. And the last recent consolidation of Djokovic's power base that helped strengthening his standing. So with the passage of time, Djokovic is getting more experienced in dealing with elites. He has taken a classic stick and carrot strategy. Djokovic seemed to undertake harsh measure during leadership dispute within Golkar and PPP as indicated in his government alleged role for issuing ministerial degree to acknowledge pro-Djokovic faction in either parties. Another example of stick approach is his appointment of Nazdem politician, Rastio, as the attorney general. Since then, the attorney general of his arrested several politicians from opposition including the head of Golkar West Java chapter, Irian Tosei Fudin, for his alleged craft when he was a head of district in Indramayi. It is clear that Djokovic is willing to use state instrument to send a clear message to the opposition not to destabilize his administration. But he also offered carrots for providing a number of concession for the KMP. Aside from government loan for victim of mud spill provided for Agurizal Bakri, the whole minister, Cahiyo Kumbolo, for example, had officially submitted a request for significant annual funding for political parties which in turn gained a lot of support from opposition. And another maneuver made by Djokovic was his success to strengthen power base by by recruiting Pan, national mandate party to support his government. So with the presence of the fifth biggest political party in parliament, Pan, the ruling coalition now has inch closer to get a majority in parliament. So from 37% to 46%. If you look at the photo, the graph, now for Djokovic, it is easy by benefiting from pro Djokovic faction in Golkar and PPP at least collecting 5% to 6% from Golkar and PPP he would able to outnumber opposition in parliament. Before that just giving summary, after recent consolidation, Djokovic power base and weakening the opposition of political parties, he began to devise strategies to regain popular appeal. Houdi was a sort of missile for example despite PDAP refusal gained a lot of support from anti-corruption activists and then appointment of well-respected anti-graph campaigner Tete Mastuki as presidential chief of staff and then rejecting Yusuf Kala's demand to dissolve the office. So it's clear that now Djokovic is moving to to retake public trust in him. And my conclusion, first Djokovic failed to deliver on his both ways of reform during his first year in office largely because of personal and external factors. Djokovic personally lacked leadership on anti-corruption and human rights issues. Structural factors are also important. Djokovic successfully ended the massive party cartel but this made him vulnerable. And it is virtually impossible for any president to overturn oligarchic influence in Indonesian politics. And after consolidation of his power base Djokovic has begun to devise strategies to regain public trust. I would like to stop my presentation by showing this amazing picture. Thank you very much. Thank you Bohan and thank you especially for building the Tony Abbott story into our presentation that makes Djokovic look so much better of course in comparison. We now hear from Eve Warburton 10 minutes of comments on Bohan's paper. Please welcome Eve Warburton. Good morning and thank you Bohan for such an insightful and thorough analysis. So thorough in fact that it's made the job of a discussant rather difficult. But I think Bohan made a very compelling argument about Djokovic's failings over the past 12 months are largely because he is hostage to his own alliances and to an oligarchic political system. But I'd like to reflect a little more upon Bohan's point about who Djokovic is as a politician and as a leader. Because what has struck me reflecting on the past year in Indonesian politics is that many of Djokovic's leadership and policy failings are a consequence of his inept commitment of politics. The president is not constantly under the thumb of oligarchic powerful elites. Rather he often appears to be doing an unsophisticated and even amateurish job of balancing and resisting the competing interests of people around him. People like Megawati, Vice President Yusuf Kala and of course Luhud Panjaitan, the former chief of staff and now coordinating Minister for Politics, Law and Human Affairs. For example when Djokovic appointed new director generals for the Ministry of Energy and Mineral Resources an extremely strategic set of positions. He avoided appointing figures associated with either Kala or Luhud. Kala and Luhud regularly compete for influence on matters of energy and mining and rarely see eye to eye. The result was a last minute bungled process in which decisions were made and in the end it was often the least qualified nominee that was appointed. And the outcome left neither Kala, Luhud the Minister, Sudhir Mansaid nor the industry satisfied. This inept management of politics has led to even worse decisions. Decisions that undermine the policies of a president ostensibly driven by pragmatism and technocratic approach to reform. I'm thinking here specifically of the appointment of Rizal Ramli to Coordinating Minister for Maritime Affairs. Rizal is a high profile economist but with a reputation for generating controversy. Djokovic reportedly appointed Rizal because he likes him PDIP like him and most importantly Kala hates him. Rizal and Kala have disliked each other for years and regularly come into conflict over a range of policy issues. The goal here was clearly to try and curb the influence of his own vice president a goal which of course he shares with Luhud. During his first few weeks in office Rizal has indeed ruffled feathers. He denounced key government policies criticised state owned companies and challenged use of Kala to a public debate on the economics of the government's electricity infrastructure targets. As a result we have even more inconsistent policy messages coming from cabinet and the communication between ministers is obviously more chaotic. This is a disappointing outcome for a cabinet reshuffle that was supposed to bring greater credibility to the president's economic team. So yes at times Djokovic is hostage to powerful elites and at times he does a poor job of managing them and at other times he appears to be completely overwhelmed. If we look at some of Djokovic's decisions over the past 12 months at times we see no powerful puppet master pulling his strings no single patron nor even a clearly identifiable circle of trusted councillors. In fact he is hot and cold with the people who many expected would be his closest confidants and advisors. Powerful figures around Djokovic have at key moments found themselves entirely in the dark about strategic decisions until moments before they were announced to the general, the appointment of former general to the head of bin, the intelligence service. This is a man associated with serious human rights abuses and the choice of Gato Normantio, a conservative ultra-nationalist as the new commander of the armed forces. These appointments appear not to be the titipan or the requests from any particular oligarch or from Megawati, but neither did Djokovic arrive at these decisions after careful deliberation or wide consultation and indeed he was reportedly shocked and disconcerted by the ensuing public backlash. I also agree with Burhan's analysis that we should not place all of the blame on the oligarchs for how the Buriguna one scandal evolved. Yes, Djokovic nominated a corrupt policeman for the position of national police chief on Megawati's request but Djokovic abandoned the kapeka and stood by mute while the police criminalized its staff and while politicians attacked its integrity and he did this not because his hands were completely tired by oligarchs. I think in part he was overwhelmed he did not understand the enormity of the crisis or the extent of public disapproval but he also didn't really like Abraham Samad and the kapekas prosecutorial style. Djokovic was reportedly incensed by Samad's pursuit of Buriguna one without first consulting with him. Personal disdain for Samad may in part explain why Djokovic did not act to defend the kapeka when it was under siege. Now of course there are more positive examples of where Djokovic has resisted the demands of powerful elites and acted of his own volition. I would highlight the decision to opahor Petral, the notoriously corrupt trading arm of Patamina that no president before him has taken on. Or the recent choice of what my Indonesian corruption watch chief and campaign advisor, Tetan Mastuki to replace chief of staff or indeed the appointment of young businessmen and informal economic advisor to Djokovic Thomas Lembong to the position of trade minister. Overall though there is little consistency and no clear deliberative process behind much of what Djokovic does. During my visit to Jakarta in July it was clear that the lines of communication between Djokovic, his staff, his advisors, his ministers were seriously blocked and that Djokovic was becoming quite isolated. His thinking and decision making process remains something of a black box and there is a striking sense that after 12 months in power the so called people's president is very much alone in the job. Finally I would like to comment briefly about the nature of political opposition over the past 12 months. Bordheim did an excellent job I think of dissecting the politics of coalition building under Djokovic. But I would like to reflect on a different aspect of opposition politics. Last year's presidential campaign was marked by the kind of ideological polarization long said to be a thing of the past in Indonesia. On one side we had Prabowo's coalition which espoused ultra-nationalist conservative and Islamist ideas and on the other Djokovic's coalition presented a more progressive nationalist political agenda. This polarization and the formation of a post-election opposition block lasted far longer than most analysts predicted and as Bordheim outlined the coalition is now slowly fragmenting. But Kirindra and Pekka S remain formally in opposition. These two parties, along with Aburi's al-Bakri's faction within Golkar, led the charge to terminate direct local elections and demanded revisions to the anti-corruption laws which underpin the Kapeka. So at the heart of the opposition's policy agenda was the rollback of landmark democratic reforms and it briefly became a reality when in September last year the outgoing parliament passed a law to remove direct elections for regional heads. And it was only under immense public pressure that SBY moved to revoke the law out of fear his legacy would be tarnished. Anti-democratic rhetoric has also made a comeback over the past 12 months. For example, Kirindra hold Kadra meetings where the theme is how to cultivate and spread the party's vision of Pancasila democracy. And it's also a trend of new order ideology where the theme is espouses politics based on consultation and deliberation as distinct from contestation and direct elections. A worrying new trend to keep an eye on I think is the emergence of more openly anti-Chinese sentiment. Since Ahok rose to governor of Jakarta we've seen more vocal anti-Chinese protest from conservative Islamic groups. Tempo recently published a rather sensationalist piece warning against the flood of Chinese labour entering the Indonesian market. Last month we saw the registration of a new political party, Partai Pribumi whose stated goal is to limit the political and economic rights of non-indigenous Indonesians. Interestingly, Joko Satoso, former general and Kirindra party official is the founder of Partai Pribumi. This group have embraced a more unabashed xenophobic rhetoric that was used by Prabowo in 2014. For the most part of the last year Prabowo himself has generally kept a low profile but he does appear in the media from time to time commenting on particular issues where he can play up his nationalist credentials the plight of Indonesian migrant workers abroad or food and energy sovereignty. So I think it's entirely possible that Prabowo will make another bid for the presidency in 2019 if he's health allows. So if Jokoi fails to convince the public that his plan for social and economic reform can improve their lives and if the economy continues to decline then by the next election we could again have fertile ground for the kind of populist reactionary challenge that Prabowo launched in 2014. Jokoi of course has four years to do better and he might. And Burhan's analysis indicated at the end there a more positive turn in Jokoi's ruling formula. His last 12 months have looked amateurish and Jokoi needs to grow out of his political training wheels rather quickly. If he's going to implement his promises, improve in the polls and improve his chances of re-election. Thank you. Thank you very much Yves and thank you very much Burhan. I think both speakers have put a very interesting alternative interpretation of the Jokoi presidency in front of you. Basically is Jokoi squeezed by the oligarchs and comes the amateur hopelessly out of his depth and I'm sure this will also now determine and dominate our discussion that is following now. Let me say a few words about the discussion. We have 20 minutes for questions and answers. Number one there will be live streaming of this entire event in fact but of course especially now for the discussion that means for you please only speak if you have the microphone in your hands and you're certain that it actually works so that people all around the world can understand what you're saying. Number two if you speak please introduce yourself. Obviously it's a very large crowd and we would like to know who you are. Number three I will take groups of three so we will have three questions and then move to answers by the speakers. And number four very importantly we have teachers from the audience just one question each so no I have two questions three questions and by the way please just a very short question directed to our speakers and with that I'll take the first round of people who want to ask a question. Please gentlemen over there and gentlemen over there a third one maybe in the middle yes in the back this gentleman there. Thank you my name is Nathan Franklin from the Charles Darwin University given that Jacoé resisted for so long to actually be a candidate for the presidency. Announcing only just before the legislative elections last year in April does that have an impact on why perhaps Amitris as a president thank you. Thank you so much from Ureth of Kala how will it impact the inter-oligarchic conflict between news of Kala, Megawati and Ria Palo and how will it impact the internal rift inside Gholkar between come into the coalition it seems like we will have to wait for more months so will this recent development of Kala's health a hi there my name is Anthony Kent from Wanash University where I was at the presidential campaign last year and it really struck me that the driving force for Jacoé was this populist appeal and appealing directly to the public in form of demonstrations etc so this was a key part of his political armory to get elected and what's puzzling me is why hasn't he retained this strategy as part of his political armory to overcome his present problems and also to pursue his agenda because that it seems to me was really where his political capital lied. Before we move to the answers let me just quickly repeat Ahmat's question because there was some problem with the microphone there so his question focuses on the inter-oligarchic rivalries involving especially use of Kala the question also how the recent health problems of the vice president might impact the crisis of Gholkar's leadership and how this all impacts on Jacoé's presidency I think the other two questions were pretty clear. Buhan would you like to take a first shot. Thank you Ahmat about inter-oligarchic conflict I think it's clear that these conflicts also apparent within the ruling coalition and about the dismissal of Pudiyawa Cesar it seems to me that the conflicts within Megawati and Yusuf Kala but I think they have always a way to resolve the problem so because Indonesian political structure is widely colored by cartel political party system I think they will have a way to resolve the problem as we will for example when Yusuf Kala have a problem Megawati then visit him and about the structure of government political parties after internal reef experiencing Gholkar and PPP for me it is a new opportunity for party cartel to come back to Indonesian politics. So if for example Gholkar party and PPP finally announce their position to switch side to Jokowi government Indonesia is drifting back to party cartel for example Jokowi just receive around 46% of the seat in parliament so if finally a trial decided that either Aburizal or Akumulaksono Faction I think both of them attend to switch side to Jokowi so for example Aburizal Bakri is very close with Luhut Panjaitan Jokowi maintain his relationship with Aburizal Bakri as well in a way that Jokowi actually more familiar with Aburizal rather than Akumulaksono first Akumulaksono is more driven by Yusuf Kala rather than Luhut and Jokowi so if Akumulaksono or pro Jokowi Faction under Akumulaksono leadership won the dispute I think the political incentive will be gained more by Yusuf Kala rather than Aburizal Bakri about the health problem I don't know and it's difficult, it depends on okay of course if there is something happen for Yusuf Kala Yusuf Kala there will be pre-nuration in MPR so people consultative assembly will proceed the process of substitution if anything happen with him but I don't know last question about Jokowi's approach on populism I think Jokowi is not really populist in my opinion in 2014 presidential election he tried to attract a support from middle lower class by using a promise on social welfare program like Kartu Sehat or Kartu Pintar but actually it just only a strategy so his actually his what is it? his characteristic a man lead driven by what Marcus Meisner coined about technocratic populism so he would like to combine between you know social empathy with the pool but in the end his characters is basically technocratic technocratic in the sense of he is non-ideological he is pragmatist practical and to some extent this tendency will be at odds with his populist appeal for example just one month after he was in office he just remove fuel subsidy so I don't think that he is really populist to some extent Prabowo more populist than Jokowi to some extent and he use lots of populist appeal in 2014 election but this populist appeal didn't manifest in his electoral support so based on the quick on and exit poll that we have conducted most support for Prabowo coming from urban voters rural middle lower voters so there is a gap between vote and voice in term of both Prabowo and Jokowi okay we had one other question the question was whether Jokowi's allegedly late entry into the game and his reluctance to become a candidate might have anything to do with his performance now I think Jokowi you could correct on that first of all I think Jokowi probably had in his mind that he would eventually one day run for the presidency but it was organized in a very last minute manner the campaign was terribly disorganized poorly funded there was no clear policy narrative it was all very confused and do I think that has contributed to his run government over the past 12 months yes of course I think that the fact that he had no experience managing political interests at the national level I think that logically explains partly his behavior over the past 12 months but I guess the question that I think is really interesting here is we're really just beginning to get to know Jokowi as a president and as a person and it's clear that many people don't really know who he is and how he works and that people who have been close to him throughout his career in solo and as governor of Jakarta that they have been isolated over the past 12 months on and off and also don't necessarily understand the process of his decision making so you know to what extent can we put it down to inexperience and to what extent can we put it down to perhaps his personality because we don't know that yet and I think that will be more interesting and that will become clearer over the next period and just to add to what Borahan said about the question of populism very briefly oh sorry okay okay we can move on that's fine oh okay I think that it was really frustrating in the aftermath of what once Jokowi won his Rela one rallying for him and garnering votes for him these people who were not paid they were not part of a party machine I mean these were the people who really felt that they put Jokowi over the line in this presidential campaign and then I think your point is that this direct connection that he apparently had with the people was sort of lost immediately after he won and I think that has been a really frustrating and disappointing move by Jokowi as well, why didn't he leverage this this power that he had that no other president has had before him and I think it's explained by Borahan's analysis that he had to deal with all this oligarchic politics once he was in power but I also think he believes that okay I'm very sorry we need to at least no speeches neither from the audience nor from the speakers themselves final round of questions Aristides Katopo there and then we have gentlemen there anyone from the middle no then I go again to the left or right like in the Labour Party room anyway ah yes there please so but Aristides Katopo first yes thank you my question is do you think the use of women's power by Jokowi is amateurish or was it in fact very effective and innovative women's power for instance using the committee which salvaged the KPK appointment process my name is Zane Goble from LaTribe University I was wondering if you could expand on Jokowi's cultural approach with Megawati in terms of languages okay and final question yeah my question is if you are like stand against oligarchy there will be a time lag that the oligarchy will be like strike back so it's always a time that instability so somebody should be only clear after a while if you are stand against the oligarchy because there is a lot of retaliation from the oligarchy and the second thing is if you stand outside the oligarchy you will be amateur by definition because you are out of the national politician that's all, what's your opinion of that, thank you okay let me briefly summarize the three questions the first question was about Jokowi's use of women's power I assume both in terms of the campaign but also as president secondly it was about Jokowi's cultural approach in terms of his language in particular with Megawati about the oligarchy so please brief answers from both speakers yeah, first of all I don't think that the last KPK selection will have by lots of not lots of all women in selecting new commissioners for KPK come up with the best result so for example being a candidate that will sounds particularly busy I think and then the police officer said in the selection interview the role of KPK just to investigate cases and then hand them over the cases to to attorney general and police so I don't know why they finally passed through a lot of not lots of candidate that really will put KPK in trouble so it's like the KPK selection committee give allocation for being one and then for police and then for another so not based on the principle of meritocracy and the second question about cultural approach, yeah I think it is clear if we look at the last five of four months Jokowi try to approach Megawati in different way so he try to deepening his smooth relationship with Megawati through cultural approach it's different if we look at his relationship with other oligarchs for example when he dealing with Yusuf Kala with Surya Paolo or with Prabhu and Aburiza I think it's all about business concession it's all about granting them creature access to patronage opportunities but in term of Megawati I don't see you know oligarchic style concession maybe in some cases but mostly in term of Megawati as a senior who like to be respected by Jokowi and then why for example showing his respect to Megawati that's enough when for example Jokowi will come you know state bishop from other leaders and then invite Megawati to come that's enough for Megawati so I think Megawati and Jokowi look at politics is not only about structural factors but also in term of culture so for them I think politics is also about cultural and of course they can speak in same language because they are both Japanese thank you Bohan so we leave one question for Yves final OK sure I'm just quickly on the appointment of an all female panel to select the kapeka's leadership I think that's another one of those mysterious decisions where everyone sort of went what why and it seemed almost like it was just to be a bit sensationalist but there were also speculation in the media that perhaps the choice of women was because women are somehow less aggressive and less prosecutorial and this was all part of the move to make the kapeka about prevention than it was going to be about prosecution also I think that as Bohan said it has proven to have no impact in terms of selecting a more credible team of kapeka leaders and in fact in one of the question times one of the women asked one of the candidates said park you are so handsome how are you going to prevent yourself from being tempted from all these women who surround you so that was quite disappointing actually on the final question yes of course I think everyone understands that Jakowi was always going to have a hugely challenging time dealing with oligarchic demands and that he can't just isolate himself from those demands and ignore them but again I think sometimes if we apply the counterfactual what if he had not decided to put what if he had decided to get rid of Budi Waseso earlier what would have happened actually what would have been the consequences and I think that we can actually be critical of getting because he is surrounded by oligarchs and powerful elites thank you before I will ask you to thank our speakers a few announcements in terms of housekeeping so it's now morning tea time it's 10.20 please be back in the room 10.40 sharp for the economic update but please now join me in thanking Yves and thank you very much alright so it's over okay yes alright from by your foot down there so so when you pull out on the post I guess the yellow thing And it should be reasonable. It should be reasonable. Yeah, yeah man, thanks. If you see me, should leave myself over the seats. I'll be back in a second. I wonder about Super Bowl. I'm wondering about Super Bowl. This one. This one. This one. This one. Check. Check. Check. Check. Actually, the projector wascarlet on top there. Yeah. And you feel the movie. Can you record that, too? It's a bit of a mess. What's your team doing today? I'm going to send that. Okay. I want to have that field card. Check. Do you want to have that? Yeah, this. Sorry? There is a committee for that. I'll show it to you guys. Yeah, I'll let you guys see. Yeah, I'll let you guys see. My recordings are probably good. My eyes cross. This is some of my recordings. I know that. I know that. That's right. Unfortunately... I know that. I know that. Thank you. That's right. Unfortunately... I know that. Unfortunately... This is the easy option. Sorry. Or a goody ship? No, you won't get that one. I just want to get him standing back from up there. It'll just go on, isn't it? I don't know. This one was like all night long. Like a good night. It's very correctional. It said he won't get it. Yeah. That is class game and then off. I just can't talk to him. I can't. He's on the street. I don't get it. I can't talk to him. He's not here. So you all think we're friends? Yeah, yeah. I don't care if he's gone. I'm not sure. I'm not sure. I'm not sure. It's not that he's just... I don't know. There's some way between this. I don't know. What if you got four? No. Okay. It's not... It's not important. I had a really, really good chat with Jamie. We had a really good chat with Jamie. We had a really good chat with Jamie. We had a really good chat with Jamie. I think we're... Come on. We'll just have to do the streaming. And don't feel bad about the audio. I know the audio in all these rooms is great. Okay. Okay. We should have a little bit of a chat. We should have a little bit of a chat. I think we should have a little bit of a chat. Okay. It's a little bit of a chat. I think we should have a little bit of a chat. Okay. Okay. I've been outside home for more than three weeks because in Jakarta I've been in Jakarta for two weeks, for the survey, so I decided that I will be here every week. So you're going to get back to Pondu tomorrow? No, not tomorrow, Sunday I'm going to go to mini-update with Achon. She's a young, healthy person. She's a little older, a little older. Apparently I had this in summer. I had this in September. In September? Yeah, I had this in September. And the next day, on Tuesday, I left. Yeah, it's a long time to be a wedding couple. You got a wife and kids? Yes, yes. And one wife? Sorry, one kid. I know them, so it's not really safe. It's not nice, I don't know. It's not safe. I'm sorry. Sometimes it's not that safe. Yeah. The presentation is loaded? Yeah. Yeah. Don't grab that mic and just give it a bit of a twist. Yeah, because it's sticking up people's noses at the moment. Yeah. And maybe angle it up a little bit. No way. It doesn't actually twist here, it only goes from here. Oh, okay. So, that's some of that. Beautiful. Check. Do you like it here? Yeah, of course it's much different from Chicago. Oh, you look from Chicago. You look. Well, originally, I have a little bit of noise. I'm totally proud of you. In Chicago, you look where? Most people, they wear back. Okay. So, you have signal framing, Sefa? Yeah. Yeah, I do watch. But, of course, I'm going to use this to make the video out of it. So, I can't go crazy because otherwise I'm going to go crap. I'm going to need time to fill that. That's what this is for. Yeah. Yes, I've been watching. Yeah. K Williams. Yes, it's really cool, it's real cool. Was he driving in one end of the city? Yes, yes. It's pretty nice. I've officially got that helping to help. Yes, it is? It is real good. I just went asked your git, if you've been willing to get it? I can decide. Sit in the middle? Yeah, but if you want to move something up? Okay. Okay, sweetast? Oh, it's still although. Ah, I'm the one. Hey, Ben. How you doing? Fantastic. So here you are, back to your roots, man. How are you? Yeah. You're looking good. You're going to be in Singapore forever. Am I cool? Yeah. Does that make you an offer you couldn't have used? Well, it's a sort of thing. I'd like to try something new every now and then. Have you ever worked here before? Yeah. How do you enjoy it? Yeah. I love this thing of this. I did, like, foundation echelons, micro echelons too, back in 1990. This is where I learned about guns and butter, mate. All right, please come in and sit down. Please sit in the middle a little bit, not just on the sides. I've been asked to ask you. I reckon this max is so good, boy. I just love the max. They're so portable. It's just new. I mean, it just changed to, yes, convert. I did this. From Windows. I run both. Oh, you run both? Yeah. So you go down here. There's OS. I think you run this program called Parallels. Parallels? It's really good. Not quite good, mate. No. This is better. Parallels is better. This is kind of written for max. And it's brilliant. It's like running something new. So I keep all my work stuff on it. And Dropbox. Yeah, yeah. So yeah, no, it's really good. I'm really good. I'm very happy with it. Is this left in the display or not? Sorry? Is this left in the display or not? I think so. I'm going to say I'm going to ruin the Luddite when it comes to Luddite. I'm not the best. We have to do something. I know. I know. I know. No. I will quickly, before it's done. You know, I've got this thing. I've got this thing. I've got this thing. I've got this thing. I've got this thing. I've got a free computer. I'm free. Might as well have a chat. It's really good. It's really good. You were fine and yours was fine. Okay, okay, okay. Hi, yo, doodoo. So, he's selling coffee, yeah. Sure. Why do you expect the after? All right, let's get started. The long line, I couldn't get a coffee. I didn't even get one, I... You didn't. Okay, let's get started, please. Welcome to the economics update. Make sure you're in the right place, this is the economics update. During this morning's session, we learned that Jokowi's primary focus has been on the economy as opposed to democratic reform. This session will gauge the extent to which this ostensible focus has led to any concrete results. We have two very fine speakers this morning to help us answer that question. First is Arif Yusuf. Arif is a senior lecturer and researcher at Universitas Pajatiran in Bandung, Inpad. He has traveled the world in his studies. He got his undergraduate degree from Inpad, his master's from university college in London, and his Ph.D. from what I understand is the 19th best university in the world. So congratulations on that. Our second speaker is Vin Ashcroft. Vin is well known to the group of Indonesianists here and elsewhere. Vin spent a number, many years working in and on Indonesia. Vin is an economist. He works on issues related to public finance and to development. Recently Vin was Minister Councilor for DFAT in East Timur and now according to Vin's LinkedIn profile, he is living the good life in the south coast of New South Wales. So those are our speakers. It's the economics update. We'll follow the same rules of the game that were followed in the previous session. Arif will spend about 40 minutes with this presentation and then Vin will give a 10 minute or so commentary. I've been asked to be ruthless as it regards the time constraints and so that should be fun. Very seldom in life do you get a request to be ruthless and so this is my opportunity. I plan to use it to the fullest extent. So please welcome our speakers and then we'll get started. Thank you. Thank you, Blaine. I would also like to congratulate Indonesia Project for having a 15th anniversary. I'm sure that Indonesia Project has been contributing a lot in terms of the understanding of economic and development in general in Indonesia without which I don't think the complex situation in Indonesia is very easy to understand. It's never been easy but will be harder. Thanks again for having me here. This is my second time talking in Indonesia Update and it's always been mixed feeling here to stand up here because many of you in front of me are my former lecturers, former supervisor. So I know the high standard of institution so I'm not hoping for a high distinction, I'm just hoping for a past. Okay so my talk will be consist of two parts. First is about recent economic development mostly micro and some other stuff. But the second one I would like to touch one of what I think you've got interesting talk is about the inclusive road under Jokowi. Now let's begin with the first one. I would like to start with the main message so just in case you miss later after a while the story is all about. So we have in terms of the recent economic development there are some challenges of course and also there are some opportunity or reason. In terms of the challenge we have at least seven so we have our economic growth constrained still by external factors which is in particular the China economy slow down and also commodity price has been slowing down. The second one is there is a little sign of sluggish domestic demand as well that we have to stop worry about and then the volatility of staple price I think can be damaging especially to the poverty reduction and then we have risk of capital outflow not much but there are and then capital spending the budget for infrastructure and capital spending has been spent sub-optimally and the second and seventh is slightly related there is a rising economic nationalism in Indonesia and also interventionism and the last is the government has done mixed signal in terms of reform so I think it has also a relationship with the stock by Mas Burhan. But of course there is some optimism that I fortunately fewer the first is well the subsidy the fuel subsidy has been removed so this give a large room for other productive spending and the second one also these infrastructure spending please you know like prospect a good prospect for a medium term capital spending takes time but it give you a prospect of more higher growth in the future and there is a little bit improvement in threat balance so X4 is getting stronger but and the last one especially more recent one there is some actions positive action I may say by the government despite many people doubt about that effectiveness so this is the main story I think so let me get into a bit of more detail so it's always good to talk about the long term perspective so Indonesia economy basically has been slowing down since 2011 so after a little bit period of high growth after from and then which is fueled by commodity boom then when the commodity boom and the Indonesian economy activity of the economy start to slow down a little bit so economic growth so sign of weakening but this weakening not bad and the other three indicators like poverty reduction and also employment generation come along with it so it's there is a sign of slowing down just to give you a little bit of long term perspective if you come to the more recent trend so you can see that the quarterly growth particularly in the second quarter has been slightly slower than the first quarter so we haven't reached the bottom so slightly slower and also I'd like to emphasize that this growth was the lowest for the last six years so it's quite pessimistic in terms of the current growth, recent growth was bad when we talk about economic growth so I think it's always good to be in comparisons with other countries so many people are optimistic still because this growth is not as weak as other country that facing similar problem people may call it the fragile five country where they are very much dependent on natural resource like us, country like Brazil for example now experiencing recession, negative growth in country like South Africa and Turkey also have slower growth than us but my take is yes that's true but if you compare it to other countries like our region, our neighbor we are a little bit worse and it's kind of worry why because we need high growth because apparently from the last 10 years, the last decade the Indonesian GDP per capita growth has been only for something percent per year and then Indonesia now is in lower income, lower middle income group and it is lower than upper middle income group so we have to catch up so it has not been apparently like that well I, in terms of sectoral growth in quarter two, this is very recent so I would like to note a few things first is you might expect that mining oil and gas and other has been the hardest hit in this 2015 there are some positive growth I mean quite significant from agriculture for example but this is mostly seasonal so the growth in quarter two which is six something percent basically because there is a shifting in harvest because of climate shift in Indonesia recently but I would like to note this whole sale, this non-tradeable sector particularly the whole sale or trade sector the trade sector is non-tradeable it has been relatively high during the weakening of the economy it means the domestic economic activity is still running but the last quarter seems that it's very weak only 1.7% so for me this is something we should take note seriously because we know that this turbulent was triggered by the external factors but when the domestic factor as well start to be sluggish then we have to think a little bit more what's going on and have to anticipate it and if you can see from this map you will see that the end of the commodity currency, the commodity boom era was reflected by the regional growth, economic growth of a region like Kalimantan and Sumatra was this having the slowest growth, some regions like some province like Kalimantan Timur, Riau and Aceh for example the oil and gas rich province they have even experience in contraction, negative growth so I just want you to have a look I mean I have to get an idea of how this region have this growth regionally distributed and come to the growth by expenditure side still the lower growth in this quarter has been dominantly contributed by investment and government spending, government spending has been slowing down quite a bit, quite a lot I think export of course, export have been negative, the growth has been negative for the last three quarters but there are two points I would like to note the import contraction in this quarter is significantly low very high, sorry the contraction is very high so it's 6.6% compared to the same quarter in the previous year and the consumption private consumption, household consumption which has been the backbone of we keeping positive growth in Indonesia also having the slowest for the last few years so this is also a bad sign because once this private consumption start to fall down then we have more serious problem combined with import well people think import is low because investment is low because I think more than 60% of our import is for capital goods and also for material goods but there are also some significant amount of import coming from consumption and if consumption is slowing down then we have to take into serious consideration inflation or in general inflation is quite high in 2015 so it's year on year I mean inflation this quarter or this month compared to the previous year's month is rather high 7.2% however BI has been the Indonesian Central Bank BI has been quite optimistic saying that the inflation will be rich I mean the target of inflation this year will be rich will be okay we have with the target of inflation talking about inflation in Indonesia for this year in 2015 we are actually experiencing some inflation in food prices we have food prices like rise increase quite significantly I use mid September here for some good reason that I will explain why this is 100 in mid September and then has been increased like 16% just for 6 months in mid September to mid March why I'm interested to this specific period I will tell you later it's more about poverty and other than rise some other commodity also increase quite significant for example beef the beef has been increased quite well for especially triggered by the sudden jump in the stock normally 200,000 tons now it's become only 50,000 so cut and it has increased volatility in food price at that time I was not worried because I know that beef in Indonesia 70% of beef consumption was consumed by 25% I'm not really concerned about that but later on people realize that beef is an elastic commodity so when the price increase the demand will fall very significantly so people try to find substitutes and the substitutes of other protein is chicken and eggs and that's why you can see here that chicken and beef correlated quite highly and interestingly when the price of this commodity is high it's not the consumer only that feel the consequences but people who do strike, who did strike the stop selling is also sellers so beef trader they stop protest they stop selling, protest because of no one buy and as well as chicken that trader, Basel trader one day I couldn't find bubur ayam chicken porridge because chicken porridge used mandung chicken porridge used chicken and people don't sell chicken so I cannot have good breakfast that day so anyway but this price is the escalation from my observation it is caused actually by to some extent by import restriction by the you know like the regulated market has been listed so government want to limit this commodities it is on the legislation so when I talk to people like in bullock former bullock official for example they say that there's no mafia this is just martyreder who read from the newspaper that government want to restrict import and then see that bullock stock doesn't have a lot so they will speculate this small trader, big trader and small trader speculate so that creates shortage but the government seems to respond rather differently they see the problem rather differently so they say that this is mafia so if you read newspaper in Indonesia like this years you can see that mention it any mafia in the newspaper mafia got mafia, salt mafia, rice mafia and mention it now the recent one is mafia pulsalistic for example electricity mafia and police as well step in they want to criminalize these people who hold the stock of beef for example because they don't want to sell it so they even use anti-terrorist criminal law to try to capture them if you want to find speculators you don't need to go it's a bit odd just to capture the speculation because they have their own property and here what I'm talking about this is just recent two days ago I have been waiting this for a month this number because apparently this year much poverty incident has been delayed to be announced for many, for reasons that I don't really know so here is the escalations of the rise price in the real term and then I come back so this is the episode from this mid-September the BPS survey the host hold and measure the poverty incident and then they do another survey in March mid-March in the period where the rise price is almost at its peak so I'm not surprised when you see that this year poverty increase what significant I think is 6% to 11.22% so well it's not only rise price but I think that's one of the most dominant factors so instead of rise increase in rise price which is 17% in only 6 months this is in 6 months only of course the economic slowdown employment opportunities are rather slimmer and also there are other things that I think is quite interesting there is a delay because during this period in November Jokowi increased the fuel price, removed the fuel subsidy and then at that time for month of November and December Jokowi managed to use the government can still have money to give them compensation to 100,000 a month for 2 months but the plan is to give them 6 months compensation but when it comes up to the new budget the budget can only be distributed with delay so for month of January, February and March no compensation, no safety net for the poor and then they can only give to the poor like in April 6 months at the same time but at that time poverty has been measured this is an example of how the management of this compensation can give a serious consequences the implication I think is not only because of poverty incident is very relevant to development agenda of Jokowi but I note something else here suddenly 3 days ago everyone blamed BBM, blame fuel fuel price increased property, fuel price increased property is the culprit and this is not good government of Indonesia, it's good they remove the subsidy they want the fuel price follow the market price they will announce in like every now and then but there is a bit of backsliding, sometimes they said how will announce it one month every month and no, 3 months then 6 months the government is serious or not, because they have some resistance still whether or not this is a good thing politically it's not a populist agenda, this purpose of people and this is a setback because it will strengthen the spirit of anti fuel price reform, so for me this service we are talking about 100 or 200 trillion budget and also there is upcoming El Nino and many expert think that this will be similar magnitude compared to the 1998 when we have double crisis, economic crisis and climate crisis of El Nino now people think that the same thing will happen government seems to be very confident with their management of the stock, which happened to be the history say seems doesn't show the inaccuracy of the statistics of supply and so the expert doubt about this and then I believe that because the anti-empor agenda is pretty much on the rise, so import will be last option people are nervous whether or not price escalation of step-ups will be more serious in the coming months now the rupiah the rupiah depreciation actually was not worse I mean was not worse than other country like especially another fragile five countries, Malaysia has been depreciating higher in Indonesia is 11% I think that this depreciation is not that serious because they have some fundamental value that is not very far from this, that's what I learned from them however there are one thing that I think I should share with you if you look at the effect of the yuan devaluation you see the bold Indonesian exchange rate movement compared to other exchange rate it's very sensitive to this yuan devaluation market reaction to China yuan devaluation is relatively strong with rupiah the third story about confidence by the market toward Indonesian economy in general in terms of the balance of payment we experience trade surplus in quarter two the export is rather stronger but the factor behind this trade surplus is not necessarily the export but the lower import apparently the price which we change the price of oil into the economic price has an effect on the decline in the demand for import we experience net capital inflow the lowest, we still have net capital inflow in general but the lowest compared to the last year we experience foreign reserve decline for the first time in quarter two some people were nervous about it, some people not but Indonesian central bank keep saying that he will maintain tight money policy to defend rupiah they did exactly like that during the turbulence of yuan devaluation they used a lot of foreign exchange reserve to defend rupiah some people criticized this because this is not really a good policy during the economic slowdown we have to try to increase interest rate, so reduce interest rate but this is very difficult because then dollar appreciation will be even worse now come to the fiscal policies in terms of government revenue initially when the Jokowi in power they understand that they are experiencing the end of the community boom, price of oil fall and with the falling price of oil the non-tax revenue fall the non-tax revenue fall quite bad, 41%, minus 41% of non-tax revenue but Jokowi doesn't want the budget to be contracting because of that so they compensate it with the high target of tax revenue so normally the annual change of tax target only 4% or 5% per year but this year, 95% increase so that's one of the reason as well why the realization of that revenue combined with the economic slowdown, economic activities going down has been very minimum so not really minimum, half of the revenue has been met, but if you compare it to the last year, this same month, at that time last year this month government has already reached 57% so we still have a problem with this but one thing that people more worry is not revenue but spending, so particularly capital spending because Indonesia now have a lot of capital expenditures compared to previous governments but until August this month end of August this month, only 20% of capital spending budget has been spent, well to give you into a better perspective, last year is 30% this month but some people still have a positive attitude saying that well normally more than 50% of capital spending spent toward the end of the year anyway so some people is not that pessimistic and also this year we have 71% increase of capital expenditure compared to the last year due to the more fiscal space that's coming from the fuel subsidy we also find some signs of this already kicking out, kicking in, so cement production for example start to growing 17% this year so this is a design that the infrastructure project financed by the government is already starting in terms of the government policy response there are many, but I didn't list all because some of them I think is not really significant so the significant government policy response this year is of course fuel subsidy reform, remove fuel subsidy and then it created 175 trillion of fiscal space but unfortunately government seems to be, you know, it looks uncertain in this reform, how they will manage this price how they want to do it one month every month, three months, six months I think this is also because of the pressures from the anti subsidy reform and there are also several I think in general the installment of Padman Minasuti on coordinating ministry has been, it seems is a good thing in general for reform and interestingly trade minister as well people react positively to the trade ministers and in the last week, last week I think, the September package the September package consists a lot of other, a lot of many things, from the regulation from strategic acceleration of the strategic projects from boosting property and accelerating the village level, Raskin and many other well, it's difficult to list all of them because it's so many so comprehensive because they said they prepare it for many months but in my opinion, well there is some notes that I would like to share, first is I'm quite I'm quite positive attitude toward ministry of trade there are 134 regulation that is revised 32 of them coming from ministry of trade, that's a majority and that consists of many cutting in red tape, simplified for me but most of them are low hanging fruit so it's not something very significant but very easy to identify that this is not a good thing so they just cut it that's what makes people quite comfortable with this new minister but however because this regulation still doesn't touch important aspect like long run competitiveness of Indonesian economy, especially export orientation and also about economic openness which many export including many people say that is the root cause of why Indonesia now is slowing down because during the era of currency boom, we are not really use that good opportunity to prepare for the coming headwind which is the end of that boom, we are not, we were neglecting we neglect the manufacturing sector and we just you know like enjoy too much this community but that of course not the fault of the current government but if you see this regulation of the new government it's really absent and also market are not really enthusiastic to this regulation, perhaps this was best way to see okay so how long there are room for improvement but it is related to the previous presentation by Burhan in this external turbulence which is mostly financial turbulence we need to manage as well as confidence of the market and that confidence of the market, the expectation of the market we need to show that we are strong in terms of the reform that we want to do but also in terms of the political leadership leadership is not strong that people are worried, people have doubt whether or not this government is pointing to the right direction so it is important to have strong jokowi instead of weak jokowi now let me give a bit of note about the inclusive growth under jokowi, this is special topic for the presentation now inequality has been rising and when the jokowi campaign the agenda is very proper and then what happened to this after jokowi is in power, so in RPGM and they show for example with the new kind of target so in office they have official target of genie coefficient now to reduce genie coefficient into 0.36 in 2019 and some of you may notice that even in our RPBN we have also a target of genie index I have a mixed feeling about this because it's not easy to have this put into target because you are not controlling the low but the bottom you only have to control the top if you want inequality to be controlled and the budget reform for me the fiscal space created by the they use more dominantly into infrastructures so jokowi has a rather different approach of having inclusive growth meaning they won't grow it first then distribution, so this is called economic term trickle down effect, so this is infrastructures and what is the real targeting well because this is not targeting and there are some recent literature that suggest that growth if you are not really manage that growth very well into more proper reducing or reducing it may even hamper the growth itself, so especially depend on what kind of structure you build, if you build like high speed train for example then I'm not so sure that this will for people like me who travel a lot for example in Jakarta Bandung this is a good thing but for the poor I don't think they can afford to buy this even the ticket for having this and another note that I would like to share is that despite jokowi rising agenda of propunous in the campaign jokowi social spending is almost exactly the same as the wise they don't really change much even just changing the names, like for example BSM they change into KIP and if you I will talk about this a bit more later but I want to take a particular attention toward education because education spending is the highest in the budget it's in the social spending budget as well as in the total budget overall so we spend $38 billion US a year for education so the problem with this is that even though the size of the allocation of the budget is very high there are problems with it, first is it has not translated into improved learning outcome, we have low visa score and the disparity and apparently I have my own research about this and also I quote some other research as to other country, Indonesian taxpayer money spent on education is not really proper and even in equality increasing, make increase in equality, particularly the tertiary education I'm about to skip this so what is the verdict of the directions of the prospect of inclusive growth under jokowi first is depend on to what extent infrastructure development will create an equality reducing economy growth for me this is uncertain, they are theoretical and empirical challenges so in this case extra direction are needed and also depend on to what extent the budget allocation support the equality opportunity, particularly in human capital accumulation education and health, health spending has been rather minimum so this remains to be seen this might take the last part of the presentation in the last 5 minutes I would talk a little bit more about what happened on the ground I would like to credit this presentation to Ross, this is not because sometimes macroeconomic statistics are boring but I think it is good to always have to be there on the ground to see what happened and if you find it you can buy your own experience and for me this is quite interesting and quite phenomenal, particularly whether this can be a good model for economic growth in the Indonesian cities so what is gojek anyway it uses IT technology like GPS that allows both driver and passenger to know each other's location that is supply and demand, it is different than traditional our motorcycle driver, in traditional motorcycle taxi we have problem of asymmetric bargaining, we don't know what is the price exactly and also inefficient, long time to wait and there is barrier to entry, they are preman the price of this license can be 10 pints, they have secondary market for it so it is their barrier, not anyone can be becoming object driver and also has bad surface now what is the gojek, gojek business model is very different, it is a partnership with a motorcycle if you have a license, 17 years old you can get a motorcycle license you can join gojek and pay 20% fee to the gojek and then the red customer pay is transparent, by distant travel it has red thing system and also you can ask them to shop for you they equipped with 1 million or 5 million rupiah money so they can spend their money first and then go to you and then you can pay later and also gojek improve financial inclusion because they have bank account to be object driver so let's see this progress, why this is quite relevant the gojek application has been downloaded 2 million times, so it means a potential user of 2 million times and this is my, I calculate from the Sakanas data, if, you know like so gojek driver has reached 30,000 people, so this 30% driver and I calculate it is equivalent to approximately 7% of existing employment in land transportation sector in those cities, if you combine with other competitors so it means 10%, so for me it is spectacular for a company that was just only recently established it is easy for a gojek driver to get decent minimum wage, 2.2 million is just like that but if you use very poor systems, you can even get 5 times 3 times more than that, and if many people talk about labor intensive sector is the way to have inclusive growth, how a labor intensive can be a good, this kind of business if you have, I mean even if you don't have motorcycle you can pay 400,000 rupiah and then credit and pay 300 a month for that motorcycle and you get 2 million, so it's very labor intensive it's very labor intensive, so it's an employment generating sector and gojek is not the only player, we have even gojek saria it's create another so it's relevant, why it's relevant, because the demand is there and the international traffic is among the worst in the world but I believe there is supply for it, in formality youth unemployment and under-employment is a serious issues in Indonesian cities very serious, if you are a labor economist, there are many labor economists who are totally agree with this, and also in villages they are sign of decreasing available job so the rural wage is going down, so this even give more relevance to this kind of development so government respond apparently has been positive so Ahok say that it's not regulated, it's not prohibitive, so go ahead so that's what Ahok do but yeah, I think it's quite good stand because they need it lessons learned, gojek bring together economic efficiency, technology adoption, in the midst of economic dualism and addressing government failure in public livelihoods, many things solved by this, can be a new and good models of inclusive growth, but most importantly let me close, if you read Indonesian op-ed in newspaper Indonesia, majority of the article at the end of the paragraph you say, government has to do this, government has to do that government always to blame, government is wrong but this emergence of this new kind of business model, I think, so as that we don't need to always rely on government and solving the problem so market driven innovation can also be a good substitute for or not well functioning government that's the end of my presentation good morning everyone, it's terrific to be here I think this is one of the best gigs at the Indonesia update because all the hard work gets done by the speaker, all the numbers, all the graphs, all the research and you just get to come and have a few views I'm going to keep it pretty short today, I just want to make three main points on a recent presentation, I think you did a very comprehensive job this morning I want to make a point about the economic outlook, seems to me that we're always trying to work out whether we're optimist, pessimist, realist or sentimentalist when we talk about the Indonesian economic outlook I love the soft way that Reef and Indonesians put it where he says well are we really doing that, well look at us against all our other countries and actually we're doing really poorly I want to say something about the fiscal outlook is there really fiscal space after the government got rid of the or the bulk of the fuel subsidy and even if there is what realistically can the government do about that anyway and then I want to finish with something positive just for a change and talk a little bit about poverty targeting some of the points that are Reef raised in his presentation so I'll try and do that pretty quickly because I'm sure you've all got things you want to contribute to this debate so I think this is the time when all of us Indonesia tragic get together here at the ANU and we sort of wrestle with this dilemma about a lot of us have got economics training, do I notice that we managed to slip a few anthropologists in this year and we've also got a sentimental affection for Indonesia and we're always looking for the potential we're lamenting about the missed opportunities that we've had but in the end we still think Indonesia's able to make it I think it was Andrew McIntyre a few years ago in a paper with someone else talked about Indonesia as a proper country and one that ought to be looked at is one of the important economic and geopolitical economies of the world, I think that's right it was true then and it's true now but each year we face these graphs like the Reef's presentation at the beginning where all those lines are annoyingly pointing in the wrong direction they're sort of going down instead of going up but when we look back at the global financial crisis a few years ago in 2008-9 and actually that was the last time I was standing here talking about the Indonesian economy the aftermath of that showed that Indonesia really is a proper economy the currency was depreciating but we weren't looking at a current account crisis it was doing what it was supposed to do, buffing the economy domestic demand provided a source of growth and again that seems to be happening now and the poor were far better off in the crisis than many other countries there was a lot to talk about where the financial sector was going to go under the collapse and the government had a response so when we look at a Reef's presentation we're kind of in the same world I hope we're not having a global financial crisis rolling over the horizon but certainly the storm clouds are starting to gather around the world that unprecedented discussion about the Fed reserve in America where in the Fed reserve statement they actually said they took into account the impact that are getting rid of quantity of easing and rising rates we have on developing markets around the world so we're in that situation again and in that context Indonesia starts to look okay so when there's a crisis now Indonesia actually looks okay which is sort of we've moved on from the late 1990s but having said that a Reef's presentation shows a whole bunch of things that are a little bit worrying we've got lagging taxation receipts coming in real productivity gains from investments years away from infrastructure developments it seems we're still talking about another infrastructure package so every time I stand up every few years to talk about Indonesia there's a new infrastructure package but as we know the real gains the real economic benefits from infrastructure are sort of years away you get a little bit of a gain from employment in the early days but the real benefits of better transport better infrastructure are quite a long way away so it's hard to see what Indonesia is going to rely on in order to grow its way out of trouble so if you're like there's a floor of about four and a half percent the domestic demand will provide in growth every year but what do we use so I think maybe that's the real point about a Reef's finished Reef's presentation about the Gojek where are those microeconomic reforms that we really need to see and I'd sort of posit that maybe Indonesia has committed that big sin of letting a good crisis go to waste in the late part of the last decade and Jacoa inherited an economy that was more or less doing the same things that it was doing around the time of the crisis and that means that catching up that a Reef mentioned in the first part of his presentation it's hard to see where that's going to come from and then we come to that fiscal outlet that question I was asking about is there really fiscal space from getting rid of the fuel subsidy I kind of think that giving credit for a reform that's so blatantly obvious and should have been done a decade and a half or two decades ago it was necessary and we all agree that it was the right thing to do but did it really create reform space particularly in that context of the world economy as I was saying it seems to me that it's maybe just kicked the can down the road a little bit and that they're probably going to run out of that fiscal space in the next few years anyway so what's really needed in the budget space to create fiscal space is increased tax revenue but as a Reef again pointed out very clearly is that increasing taxation in an economy that's not growing strongly is pretty silly idea what happens is tax revenue starts to grow as the economy grows so it comes back to that question of what's going to drive the growth certainly there's more they can do on administration but in terms of tax policy it's hard to see how that's going to sensible and then we talk about even if there is fiscal space what might the government actually be able to do about this now this is one of these very annoying questions where economists will have a yes answer and a no answer so I would say I'm going to be able to do about it not a lot in the sense that the government always struggles to spend its budget so I remember well a Reef's presentation shows despite efforts to increase tax revenue for what they're struggling to spend the budget that they've got they created fiscal space and they're struggling to spend it on the other hand and I want to say a couple of words about this before Blaine tells me I have to sit down again there has been one area of very significant reform since the global financial crisis and that's around poverty targeting so the transfer system has developed quite a lot and I want to say a little bit about that in a sec and you now have some quite good avenues for counter cyclical fiscal policy in the context of a downturn but I think the bottom line for the budget is it has to become a much better tool for national development policy so the reforms are how policies formulated and then executed through a national budget with a real goal of what it's going to achieve but those reforms are long overdue and I think still haven't been addressed sufficiently so the last thing I want to say is about poverty targeting that table there is out of a review I did for the Australian government recently on the support it was provided to the Vice President's Office the national team for accelerating poverty reduction on this I think a recent assessment was also very good about social programs under the SBY government and I'm glad to say it's been continued on by the current administration if we go back to 2008-9 when the global financial crisis rolled around the Indonesian government was looking to create a stimulus like many governments were about 1.5% of GDP putting the deficit up from about 1% to 2.5% of GDP now in the end for those who go back and look at that stuff the deficit that year was about 1.5% of GDP so they actually came in 1.5% below what their original forecast was so they weren't able to spend and the options that we had in front of us is all the people looking at this policy were pretty poor now Budiyono who then went on to become Vice President was coordinating minister for a bit of that period and then he was Bank Indonesia he was determined that wasn't going to happen again so he put in place the national team for accelerating poverty reduction and I have to say the work that's been done over the last 6-7 years is nothing short of miraculously you now have a unified database of about 20 million households Indonesia can really identify individual households in the poverty distribution and most of the main programs are like Raskin we all know that there's been many talks about Raskin in this room over the years Pekahar that's the conditional cash transfer it had a very slow start you can see there just on recipients it almost tripled over that period the school scholarship that Arif mentioned it's now been slightly rebadged and the unconditional cash transfers they all significantly better targeting so that now that the government not only is able to target it better I also get better value for the money that it spends but the impacts that come out in terms of poverty alleviation and reduction are much clearer and much better for the amount of money being spent so that's terrific and Jakowi has sort of inherited that and begun that process of issuing these cards but had he come out and been issuing health cards and education cards without a way to properly target them it really would have just been political rather than having any material impact and so that's a really good thing I think bottom line though is poverty alleviation is really no substitute for those microeconomic reforms where's the growth really going to come from being able to better target these programs that provide some assistance to the poor is a great thing but it still leaves aside that whole question of where economic development is going and I think that was the bottom line from Arif's presentation but I'll leave it there thank you very much. Okay thanks very much Ben and Adi. Now we'll have about well 20 minutes or so for questions and answers. We'll stick to the, we'll follow the same rules of the game as established by Marcus in the previous session so we'll take a question in batches of three starting here on the left first number one nobody on the right here in Australia today okay in the middle and also in the middle okay so please again one question per person no multiple questions no multiple part single questions no speeches and keep it short and sweet okay but don't start talking to get the microphone because we're feeding live to the entire world okay go. I'm Steven Sherlock I'm a governance consultant and also visiting fellow here at ANU. I wanted to ask the response of both speakers to the discussion that's been on the Crawford School blog recently the argument that good times produce bad times produce good policy. It seems as Arif has pointed out that we're seeing a period of continuing bad policy increasing intervention, economic nationalism, flip-flopping policy while at the same time as the circumstances of the Indonesian economy seem to be getting worse. Does this mean that the situation will have to get a lot worse before there is pressure on current policy or what? What's your response to this debate about the good times bad policy thesis? Go ahead. Thank you for an interesting presentation about economy in Indonesia. Indonesia now I have an erroneous problem in economy because in some fields in Indonesia in particular in my country you know they choose for eating tibble because high priest in Sambako and Indonesia as rice, chicken, meat etc. So my question could Jokowi government finishing this problem because Jokowi at the first now he has style for Jokowi special. So now we have problem about Rupiah because this is a big problem in Indonesia but in our village like ASI they choose eating tibble. This is our problem in my feeling. Thank you very much. Okay price main question is what to do about rising prices for staple goods and Jokowi's blue sugar style. The third question from where now? Where is our man? Stand up with the A. There you go. Thank you my name is Sutrisna. I'm from University of Queensland. I would like to ask a question related to the economy growth that we have as been presented by Parif, the economy growth in Indonesia. Now we still have like positive 4.67% I would like to know about the income distribution landscape along with the economic growth because I've been reading several article in news that poverty is increasing in Indonesia so I would like to have the income distribution landscape. Thank you. Okay thank you very much. Just to review briefly three questions. One on good times bad policy, bad times good policy rising prices for staple goods, chicken, rice etc and blue sugar and then in addition to the economic growth distribution of income. So go ahead. Okay thank you for the questions about this policy bad times bad policy. I think honestly I can only hope. Why? Because this definitely we have a new kind of government. I mean new kind of time is the people who are behind Jokowi's the cabinet is different. It's kind of new generations that is not our technocrat that has experienced in handling economic management in many situations and definitely there is a rising interventionism. In fact in interventionism I don't see any chance that we have a turning point in the direction towards this. So my response to that I can only hope. And I still hope that the resouffle, the last present resouffle can keep a stronger attitude toward reforming this. That's the only hope for our colleagues that are in the cabinet they are still, I'm very sure they have this good feel about this thing. But there are other populism that is very difficult to avoid. For example agriculture is very strong so I'm sorry I cannot respond much but I can only hope that our colleague in the cabinet that have this better perspective on the situation can have power to direct to the better direction. The second one is about food security so this is also related because the food security now is translated into more self sufficiency which is not really good. I want to share an experience of a good mind who meeting personally with Jokowi that he said that Jokowi was very proud saying that the price of rice has been rising. It's good for the farmers. Because Jokowi said explicitly like that. But this colleague of my friend said directly to Jokowi, sorry about Jokowi but you are not only the president of farmers. You are the president of Indonesia and particularly even some farmers not really benefitting from this rising price. So farmers they can grow rice but still eat people. So it's important that this self sufficiency agenda has to be into benefit of everyone including farmers who are not really on the land or farmers who are really buying the rice from the market not from their own produce. And the last one is in terms of income distribution. So income distribution has been perhaps interesting development in terms of the income distribution. I didn't saw it on the graph but if you see the era of commodity currency boom from 2009 to 2012 that's the period where the genie coefficient rises from 0.36 to 0.41 and interestingly it stopped when the booming period end. So from 2011 onward to 2014 the genie coefficient has been stabilizing at 0.41. So people start to argue or to hypothesize that actually the culprit of this rising inequality in the last years before 2011 actually the share growth. A bit the growth coming from the commodity boom has been shared equally and I think this is quite intuitive because the commodity boom is very land intensive, capital intensive growth. So people who benefit it is mostly land owner or capitalist even the coal price rise who benefit it? Not the poor. But if you ask me about the recent development in genie coefficient until today well it's still on the 0.41 so it's still not much change and still this is still a big problem for the economy because I think inequality high inequality is not good for growth because high inequality will be demanding more redistribution and demanding more redistribution will give a nuisance political nuisance to the stability of the politic and many other theories that say that. If you ask economists like ten years ago people will say that well we have to grow first in inequality later but if you ask many economists now so they start to change their tone. Many more economists agree that inequality can be hampering economic growth. So I am actually in the side of that view. Vin you want anything burning to add or can we just give you first shot of the second round of questions? Okay let's do that. Let's take three more questions and then we'll get Vin in on the first. Raghav number one way back there number two. Yeah with the blue bluish sweater on. Anybody over here on the left? You guys are all over the place today politically. Okay you're in the middle. Raghav go ahead. Okay thank you very much. My name is Raghav Bender Jha I'm from the Uncaught in Department of Economics. Thank you Arif for a very good review of your comments that followed. I hope you'll allow me to trade two comments for one question. Only because you're the chair I have two comments they don't need to respond to them but they can take them down for reference. The first comment I have is that sometimes you can learn quite a lot about a country by comparing it with others particularly your neighbors and in that sense what you did was you compared Indonesia in respect of outcomes for example GDP GDP per capita growth and so on and so forth. You did not compare Malaysia and basically the ASEAN even the ASEAN average with respect to policy space and policy and policies directions. I think that's very important especially in the context of a country that's part of it such a strong and old common market so that's I think that's very important to get you a sense of perspective on what's going on in Indonesia. The second comment I had was that you said that the mood in the country is turning inward people are not so people are becoming they don't want to engage so much with the outside world and perhaps it has something to do with the fact that the commodity boom is over and that the case that the outward orientation of the country is a function of how well you are doing in terms of what to get from the rest of the world and that is particularly important because for example in controlling rice prices and so on and so forth more openness is called for rather than less openness. I'll stop there. Okay thanks Raghav, back here. Thank you. Adi, one month from University of Indonesia. I want to further us related to the Gojek system, the consistency of the local government in this part, Ahok with the Gojek compared to the other Uber system. Why Ahok support Gojek in other hand and on the other hand with the Uber system for the substitution of the taxi driver. Even President Jokowi support Gojek and has hosted the Gojek driver and other microlet driver and other driver to have lunch together in the President's palace. Do you have any rational economic analysis or it is related to the political explanation related to the populace issue? Thank you. Thank you very much. Somebody here in the middle I believe right? Thank you Parif. My name is Awidia, PhD candidate at ANU. Looking at broader context of international economic relations, it seems to me that Indonesia is very careful or more precisely less interested in pursuing trade liberalization in terms of bilateral FTAs. For instance Indonesia only has two bilateral FTAs, one with Pakistan and one with Japan. Compared to other countries, we know that Thailand, Malaysia, Singapore have more bilateral FTAs than Indonesia. We see a lot of happenings in the region and Australia itself has concluded some important bilateral FTAs with Korea, Japan and China. So how do you see a set of Chakrabi substation in pursuing a bilateral FTA? Is there any prospect of having more active or more assertive stance on bilateral FTAs? Thank you. Three questions. Raghav makes a point about comparison with neighbors and the inward looking perhaps as a function of commodity boom. There's a question on Gojek and other Uber-like initiatives in Indonesia and the third was on FBI, isn't it? Then why don't you go ahead, you work in a variety of countries. What do you think about the comparison with neighbors and inward looking as a function of commodity boom? I think this is the key issue that I was kind of alluding to in the first part of my discussion was that you have to look for those drivers of economic growth and it's for Indonesia really in the way that the world sort of developing and with some of the instability that we see around, it should be the large dynamic economies like Indonesia like China, India, Brazil that are doing well. Now there's quite a lot of difference between those that are doing well and those that aren't. But I would just say in regards to your comment in ASEAN Indonesia's distinctly different type of economy to pretty much everybody else in ASEAN. It's got a much stronger domestic demand. It's a much bigger and more diverse economy and it has more resources. So it should be very much outward looking in its orientation but I would say increasingly domestic demand and competitiveness within Indonesia will be what drives prosperity and growth. And that's what we're not seeing. So microeconomic reforms in a sense. So the idea that Indonesia can be Australia and just keep digging things out of the ground and flogging it overseas, which seems to be our... I was talking about this with the Ambassador last night over dinner. We have 20 million people, 25 million people in Australia have 240 in Indonesia. So that can't be the way Indonesia goes in the future. And just to address that last question about trade and investment, there's slightly different concepts here in an Indonesian sense. I don't think Indonesia's closed off. For a long time it's been the non regulatory barriers that are a problem in Indonesia. So the legal framework's poor, property rights are poor. We're talking about oligarchies in politics but oligarchies in business are equally a barrier to entry. And so I think getting investment up is about changing the investment climate. And partly that's about some very difficult reforms that I hope you guys are going to talk about for the next two days about land reforms and a redistribution of capital within Indonesia. To me Indonesia still is a little bit like a big rentier state where the incentives are all there for big capitalists to form big conglomerates and then lobby the government for very favourable conditions for their business rather than making Indonesia truly competitive. So that's what I'd say about the trade and investment climate. Great, thanks Ben. Okay, Arif, what about Gojek? Is it economically real or it's just political window dressing? Well, it's coming from the ground. I don't think it's a political window dressing. But with the question about why Ahok doesn't really like Uber, I think you should ask Ahok himself. But anyway from what I understand, Ahok reason is that because Gojek is registered and then it can come through taxation system but Uber seems to resist of becoming officially and become part of the tax system. So Ahok said it's that to generate any revenue. So Ahok is more reluctant to accept about that. But it has to be confirmed with him. Anyway, but the first comment I think from Raghav, Raghav is my panel in my PhD thesis so I won't respond too much. I will just take notes. But anyway, yes Well, it's a commodity boom offer. It's part of the story of why we have protectionism. Maybe yes, maybe no. Yes, because yes, normally people tend to vote the protectionist in the bad times. But in Indonesia, this protectionist spirit actually has been there for a while. I mean even before SBOF, if you see the regulation, trade regulation, investment regulation, industrial regulation, it's there since 2012 or 2013. So it's there. I experimented myself. I mean the horticulture import is very limited. My wife who are Thai cannot get durian from Thailand in very cheap price and things like that. So it's happened before too. About trade in general or FDI, perhaps FDI I think we cannot expect. Even if you improve the system of license in investment you reform the bureaucracy of new investment, the permit of investment, I don't think you will expect some transformative change if the government still give a sign that he's going to be protectionist. And the key to gain benefit from the trade now is related to global value change. You know like iPhone, iPhone they produce in everywhere in the world except in Indonesia. So this is a sign that FDI will not come in significantly if this protectionism is still in the rise in the agenda. So market I think can see it very clearly and they will react accordingly. So for me the transformative action is we have to see long run in terms of how this competitiveness we have to learn from the past that the community boom is not an era where you can just stay and relax but you have to watch over that it will end very soon. I think this comment. Thanks very much. I'm afraid we're going to have to leave it there. We've run out of time. Before we thank our speakers I have two announcements. One on Friday prayers for those of you who are interested in Friday prayers there will be somebody at the back of the lecture theater. I guess that's back there someplace to direct you to where you can do that. The second announcement has to do with the next session. It starts at 1 so you've got lunch between now and 1 o'clock. Please come back in a timely manner and be in your seats so we can get started on time. Now let's thank our speakers. Thank you.