Indonesia after Suharto: 20 years on

By Keith Loveard, Senior Analyst

As Indonesia reflects on the 20 years since the resignation of President Suharto on May 21, 1998, the simplest conclusion is that the outcome could have been much worse. As one of the first of what later became known as the ‘color’ revolutions that went on to shake the Arab world and many other nations that overthrew dictators, Indonesia has moved on from the severe dislocation of its society and forged ahead.

In the process, it has proved wrong the doomsayers who in the years immediately following Suharto’s downfall that the country was heading for a Balkan-style break-up. Severe communal conflict in Central Sulawesi and Maluku was overcome, although tensions still remain in the former, and the long-running separatist movement in Aceh was finally laid to rest with a peace agreement sealed in 2005.

B.J. Habibie, who took over as president when Suharto stepped down, brought surprising change. The media was freed, a process in which the military stepped back from its close association with power began, and the people of East Timor were allowed to vote on their presence within Indonesia.

The destruction and bloodshed that met their decision to leave the republic as the Indonesian Armed Forces (TNI) and its proxy militias wreaked revenge did not alter what was a heroic decision by a leader of whom few had accepted much.

PDI-P leader Megawati Sukarnoputri was denied the presidency by a cabal of Muslim politicians who refused to accept a woman in the post

Habibie also set in motion a debate that led to the decision to end the domination of power of the center over the regions. Under Suharto, Jakarta had tended to lock in as much as 60% of Indonesia’s economic output, starving the regions of funds for development. Not only areas like Maluku, Papua and Aceh showed tendencies toward secession, but also ‘heartland’ provinces such as Riau. Habibie’s move to introduce regional autonomy was critical in keeping the country together.

But Habibie was not to last. New elections were set for 7 June, 1999 and the forces of change were too strong to accept the continuing rule of a man so closely associated with Suharto’s New Order.

If Indonesia’s ‘revolution’ had a color, it was red. The first free elections in the wake of Suharto’s resignation and in fact the first since 1955 saw the streets of Central Jakarta and many other cities turn red with supporters of the Indonesian Democratic Party of Struggle (PDI-P), who went on to take the largest number of votes – but not a majority – on voting day.

PDI-P leader Megawati Sukarnoputri was denied the presidency by a cabal of Muslim politicians who refused to accept a woman in the post – although she was to take over the national leadership two years later when Abdurrahman Wahid, the Muslim cleric who had leap-frogged into power, was impeached. Her initial rejection by the Muslim lobby reflected an internal debate about the role of Islam in society that continues to this day, not least in the form of Islamist jihadism.

That initial denial of the popular will also opened another avenue that today sees many wonder what the ‘revolution’ of 1998 achieved. Democracy, while apparently alive and well when it comes to turning out to vote, seems to many to represent little more than an expensive beauty contest between members of the elite for the right to control the resources of the state.

Political parties typically top the list of institutions declared disappointing in opinion polls. Corruption – so often the apparent motivator for political careers – is so rife and cuts across all party boundaries that the level of cynicism about the process of bagi-bagi kue (sharing the cake) is hardly surprising.

While some see little chance of Indonesia abandoning democracy, the present condition provides little evidence for any great level of support for it either. People still get out to vote, but they do not seem to have much confidence in the leaders they choose. Changing that system for a new autocracy that was seen as ‘benevolent’ might appeal to some Indonesians.

However debate about politics and the management of the country is so active that any move to revert to autocratic ways would immediately meet with a storm of protest. The voice of civil society – which has emerged as a major player in today’s Indonesia – has become powerful. What Habibie began with the ending of the licensing system for media outlets has been strongly accelerated by the arrival of social media, even though it has brought with it many negative aspects.

They called it reform
The post-Suharto period was tagged reformasi – the reform era. Arguably, any efforts at structural social or political reform have ended. It was, at best, a partial process. Indonesia adopted a pragmatic approach to the sins – and the sinners – of the past, deciding collectively that it could not afford a witch hunt that was likely to create a civil war or at least create such enormous divisions that the country would have been paralyzed.

Instead, the communal decision was to sweep the dirty business of the past under the carpet. Clearly, not everyone is happy with that situation, not least Suciwati, the widow of Munir Said Thalib, murdered by intelligence agents as he was on his way to Amsterdam for study in 2004. Poisoned with arsenic during a stopover in Singapore, he died in agony as the aircraft flew toward Holland.

The reality of Indonesia in 2018 is that the past is the past, not to be revisited

It is hard for the victims of such cruelty to allow reform to become a moment in history that has passed. That does not appear to be a problem for President Joko Widodo, who despite his promises of action on this front before and since his election, has done remarkably little to meet those promises. The reality of Indonesia in 2018 is that the past is the past, not to be revisited.

Jusuf Wanandi, co-founder of the influential Center for Strategic and Intelligence Studies (CSIS), states that “the political process has not been completed.” But it is difficult for him or anyone else to state categorically what the best balance is between righting past wrongs and retaining public order. The results of ‘color’ revolutions elsewhere in the world, or the subjects of regime change, such as in Libya, demonstrate the dangers of pursuing radical change.

Wanandi, who helped bring Suharto to power as a student activist in 1965 and was for many years a close advisor until the old autocrat tired of him, bemoans the lack of institution-building under the reform period. There has been too little attention to legal structures, creating a legacy of weak institutions. Partly, he says, that was the result of a decade of “standstill” under the presidency of Susilo Bambang Yudhoyono.

The military returns
One of the main reasons for Widodo to have done remarkably little on the rights front is presumably his reliance on the military. While the National Police proved to be natural allies, the military needed more persuasion that they should support the upstart politician from Solo in Central Java. It was not until the removal from power of former TNI commander Gen. Gatot Nurmantyo last December that Widodo was finally able to install a commander to his liking.

Convincing the military to back him also required handing out powerful positions to the old soldiers. Wiranto, Armed Forces commander at the time of the Dili mayhem in 1999, as Coordinating Minister for Politics, Security and Legal Affairs; Ryamizard Ryacudu as Minister for Defense; and most recently former TNI commander and retired general Moeldoko as his presidential chief of staff, surround the president like a Praetorian guard.

Keeping the military on side has also meant substantial budget rises. This was particularly noticeable under the previous president, Yudhoyono, himself a former general. But Concord’s 2014 analysis concluded that the rise in expenditure on the military was strictly in line with the improving gross domestic product.

Of more concern is the slow but steady creep of military influence on civilian affairs. Concord’s Trends document published every Friday includes a section which notes the following: “Activists have criticized moves by the Armed Forces (TNI) to increase cooperation with government agencies and place personnel in strategic state bodies, saying the plans threaten military reforms.”

It notes that since late 2014 – when President Widodo came to power – TNI has “increased cooperation with a number of government bodies, including the Transportation and Agriculture Ministries, the National Narcotics Agency (BNN) and most recently with the Attorney General’s Office. It is also pushing for a stronger role in counter-terrorism operations through the revised Anti-Terrorism Law, currently being debated in parliament.”

Inroads have also been made into the agricultural sector, through a ricefield creation program that was cancelled recently due to indications of corruption, and in narcotics control and chasing down tax cheats. Increasingly, the military is back in the civil arena, in a sign that the tide of reform has reached its peak and is now receding. Where it will stop is anyone’s guess.

James Castle of Castle Asia, a witness to all the changes that have occurred in Indonesia over more than three decades, notes however that the military passed up a number of opportunities to take an even greater role at the time of the collapse of the Suharto regime and in the years immediately after.

Rizal Ramli, most recently in the public arena as a short-lived coordinating maritime affairs minister under Widodo, admits that he advised former Armed Forces commander Wiranto – now the coordinating minister for politics, security and legal affairs – to take over the reins of government when Suharto was about to resign. Wiranto then sought advice from other generals and was persuaded by them – notably by Yudhoyono – not to do so. Ramli says Wiranto to this day regrets that he did not take the opportunity. Future military leaders may not be so reluctant, but it would take a major crisis of public confidence to allow that to happen.

Rebuilding the economy
There has been widespread reform of the economy, and this is one area where institution-building has been more successful than in other spheres. If this had not occurred the country would be in a far more serious position today than it is. The rupiah may be losing value, but it is doing so at a very slow pace, a mere fraction of the woes being faced by Argentina, for example.

The need for reform in the economic sector was dramatic. The situation changed from Indonesia enjoying GDP growth of 6% before the crash of 1997/98 to negative growth of 13% – in other words, the economy went backwards by an enormous 19%. Banks crashed to the ground across the country, only for government rescue money to be corrupted by bank owners who stacked it into containers and shipped it off to Singapore and Hong Kong.

Since then Bank Indonesia has been transformed from an institution that was part and parcel of systemic corruption under Suharto’s New Order regime to an efficient and cautious watchdog, along with the new Financial Services Authority (OJK), which has taken over the role of monitoring bank compliance. Christine Lagarde, head of the International Monetary Fund, acknowledged earlier this year that Indonesia has progressed dramatically.

Policy on energy is confused as a result of conflicting interests

Unfortunately, not all sections of the economy have been transformed to the same degree. Management of food security remains a hit-and-miss affair, and the entire system of import licenses for foodstuffs and most other goods is gamed to benefit critical players. Consumers pay a high price in order to allow such players to cream off huge profits. Jim Castle states that manufacturing remains cosseted and, as a result, uncompetitive. Logistics, again a victim of the do-nothing years of the Yudhoyono administration, has only recently received attention.

Policy on energy is confused as a result of conflicting interests. The Energy & Mineral Resources Ministry and state energy company Pertamina continue to act as cash cows for the government whenever it needs to call on it. The latter is in the invidious position currently of having to both act as an efficient international operator and performer of “social obligation” in which it underwrites government policies such as fuel subsidies. It cannot realistically perform both functions.

In the 20 years since Suharto’s fall, Indonesia has gone from a situation in which it was seen as energy-rich to one where it is now seen as running short of energy supplies. There has been minimal exploration for new reserves of oil and gas because incentives have not been there, while on the downstream side inefficient distribution systems have meant that some areas of the country e.g. North Sumatra, are starved of energy. This clearly represents a failure of policy.

The same is true in the mining sector, where contradictory regulations over the past decade have seen the diminution of foreign involvement and a general downturn in the industry. What appears to be preferential treatment for some operators, most recently state-owned miner Aneka Tambang by allowing exports of unprocessed ore, has seriously undermined confidence in the government among investors who had acted on the promise that such exports would be banned in favor of smelter development.

While the Widodo government has been praised for moving ahead with an impressive program of infrastructure development, virtually all of the work has been handed on a plate to the state-owned sector. As a result, SOEs have come to control an increasing part of the economy. Analysts say this is a reaction to the climate immediately after the 1998 economic crash, when assets were sold off cheaply to private sector interests, allowing the rapid rise of companies from this area of the economy.

Many believe the current dominance of the SOE sector is unhealthy. Contracts are often negotiated in a manner that is not transparent, and management of those projects tends to produce outcomes of less than optimal value. Critics say the establishment of a reasonable balance between private and public sectors appears to be some way off.

Criminal justice
One thing that has not changed is the very different treatment that a well-connected member of the elite can hope to receive if caught out in a crime and that meted out to a member of the lower classes. In accepting a pragmatic response to the demand for reform and not interfering dramatically with entrenched social structures, Indonesia continues to treat its citizens in very unequal ways.

It is, for instance, a distorted world where small-time drug abusers get longer sentences than corrupt officials. The nation’s prisons are bursting at the seams as the government continues to insist on draconian punishments for minor crimes while Indonesian Corruption Watch states that the average sentence for corruption is just 2.2 years. So while Indonesia is deeply unequal in terms of control of resources, it is also highly unequal in terms of opportunity and treatment before the law. Arguably, this is one aspect of the “unfinished revolution” of 1998 that may one day be revisited.

Rizal Ramli goes so far as to describe Indonesia as a “criminal democracy.” He claims that as much as Rp75 trillion ($5.3 billion) is corrupted each year from one level or other of government, with some 10% of that amount going to the political parties, and the rest ending up in the pockets of privileged individuals. The reform period, in encouraging devolution and the much-needed transfer of powers to the regions, has democratized the theft of state assets. Yet, as Jim Castle stresses, the empowerment of the regions has at the same time allowed the circulation of far more cash to areas outside of Jakarta, and by no means all of it has been used for personal greed, instead feeding genuine development.

The rise of Islamist terrorism can be blamed almost directly on the decision of Habibie to allow free speech

In another negative result of the changes introduced in the wake of Suharto’s fall, the rise of Islamist terrorism can be blamed almost directly on the decision of Habibie to allow free speech. This allowed radicals who had been driven underground by Suharto to re-surface and grab the public megaphone. And while state action has continued to discourage any discussion of leftist ideologies, the police and other agencies have been reluctant at best to crack down on the spreading of divisive Muslim ideologies. The cost of a more open society – at least as far as the Muslim community is concerned – has been the creation of enormous challenges for the security apparatus.

The conclusion, then, is that Indonesia has moved two steps forward, one step back. That is by no means a unique description of the state of the nation, but it is nevertheless a reasonable one. In reporting Indonesia 20 years after Suharto, it might be seen as remarkable that his legacy continues to crop up on a daily basis. Yet considering that the revolution that overthrew him was only half a revolution, it should not be so surprising that the half that was left untouched should continue to act as an obstacle to the creation of a modern and democratic state. To a large degree, the state remains a semi-feudalistic structure based on the patronage that he so skillfully enacted.

Pressure for further change will continue to bump up against, and be resisted by, the privileged minority. And at every step, the need to minimize local jealousies – between races, religions, ethnic and social groups – will be paramount if conflicts are not to occur.

The last word perhaps belongs to Jusuf Wanandi: “The problem is how to change. How do we change the bathwater without throwing out the baby? It is a miracle that we have survived as long as we have.”

A version of this article was first published for clients of Concord Review on May 21, 2018.