Sunday evening (15/06), the second debate between Indonesia’s two presidential candidates - Prabowo Subianto and Joko ‘Jokowi’ Widodo - was held. This debate was broadcast live on various Indonesian television stations and - once again - managed to become a trending topic on social media. The debate, the theme of which was ‘development of the economy and social welfare‘, was characterized by a nationalistic and protectionist tone. This tone had already been set by Subianto in the past weeks but now Jokowi also stressed protectionism.
The reason why both candidates stress protectionism and are eager to evoke nationalistic sentiments is because this strategy is an important vote earner. The threat or idea of Indonesia’s economy being dominated by foreign, particularly western forces, finds easy breeding ground in a country that has a long colonial history. Subianto in particular tries his best to evoke these sentiments, not only by his words but also by the way he dresses (copying Sukarno, Indonesia’s first president and national hero who spent almost a lifetime fighting the Dutch colonizers). In many of his answers in the second debate, Subianto found a way to mention the negative impact (and injustice) of foreign forces on the Indonesian economy. For example, when answering the question what can be done about the country’s wide trade deficit (and current account deficit), Subianto answered that it can be done by reducing the role of foreigners in the country’s oil & gas sector, thus leaving more resources for the benefit of Indonesia. However, without foreign participation chances are more likely that the declining trend in domestic oil production, which has been ongoing for more than a decade, will accelerate.
Jokowi felt the need to follow suit in order not to lose out on votes and also stressed, on several occasions, that foreign participation in the Indonesian economy should be curbed. For example, he stressed that with the implementation of the ASEAN Economic Community in 2015, inflows of foreign businesses - for example - the aviation industry, should be curtailed through protectionist measures or through making it more difficult for foreigners to obtain permits (although Indonesia is already famous for its lengthy and expensive permit processing). On other topics, Jokowi was more foreign investor-friendly. For example, regarding contract renegotiations with foreign companies in the country’s mining sector. Jokowi said that although some contracts are unfair from an Indonesian point of view, these contracts need to be respected as they had once been approved. However, when contracts have expired or in case of new contracts, the government should make sure that it contains fair conditions for Indonesia.
Jokowi also stressed that education is one of the keys to encourage the establishment of a new generation of productive and innovative entrepreneurs who can compete with foreigners. This would imply the occurrence of a ‘mental revolution’ according to Jokowi.
Prabowo Subianto stated that - if elected - he will combat the ‘leakage’ in the country’s public finances that results in losses of about USD $84.5 billion per year. These funds should be used for infrastructure investments (particularly deep-water seaports and double-track railways) in order to make local products more competitive on the international market, as well as for investments in agriculture.
Regarding economic growth, Jokowi has a more realistic view compared to Subianto (who want to double public debt to chase 10 percentage point growth). Jokowi targets economic growth of +7 percent (year-on-year), provided that infrastructure and red tape can be overcome as well as by providing incentives for export-oriented industries. Moreover, Jokowi believes that in order to combat ‘public fund leakages’ the system of governance should be improved to support budget efficiency. New available funds can then be injected in infrastructure, education and health. Jokowi also said that - based on his experience as mayor of Solo and governor of Jakarta governor - adequate space for small and micro businesses is important as these businesses are the basis of the micro economy.
The third presidential debate, which will focus on internal politics and national security, is scheduled for 22 June 2014.
Recent popularity surveys indicate that the gap between Jokowi and Prabowo is narrowing, thus the election seems to become a tight one. On 9 July 2014, the Indonesian people will go to the ballot boxes