Indonesia strengthens diplomatic and trade relations ahead of 2019 election

One of the world’s largest democracies, with a population of around 259m spread across some 17,000 islands, Indonesia today faces some complex political challenges. Home to dozens of different ethnicities, several major religions and hundreds of languages and dialects, governance has long required a balancing of centralising and decentralising political forces. It has also required the accommodation of uniform ideas of citizenship and religion with the multi-cultural and multi-faith realities on the ground.

In 2017 these dynamics continued to affect many aspects of Indonesian life. Yet, for all the tensions, the country remains a place in which political debate and discourse are lively and largely peaceful, with elections and their outcomes widely accepted. At the same time, Indonesia has continued to strengthen its role as a major regional power, acting as a leading light in ASEAN and an important economic and political ally for many nations, both in the Asia Pacific region and beyond.

ELECTORAL CHALLENGES: The year 2017 was partly characterised politically by the revival of several long-standing controversies regarding electoral laws, as the country began to gear up for the 2019 presidential and legislative elections. Under the current Presidential Election Law of 2008, candidates for the post can only be nominated by parties or coalitions that have received at least 25% of the popular vote or 20% of the seats in the People’s Representative Council (DPR) – the lower and more important house of parliament – in the most recent legislative ballot. Until now, presidential and legislative elections have therefore been held at least three months apart, but a Constitutional Court ruling in 2014 changed that. For the first time, elections will be held simultaneously, on April 17, 2019. Eligibility for nomination is therefore now dependent on the results of the 2014 DPR ballot.

However, the thresholds contained in the law have come in for criticism, with a Constitutional Court challenge in 2013 arguing that they were too high; no single party has yet achieved such a percentage of the vote, or share of the DPR. The argument is that the law compels the creation of coalitions behind a presidential candidate, in turn giving the members of these groupings unconstitutionally significant powers over who stands for office.

The 2013 challenge was dismissed, but in 2017 the argument was revived, and a further attempt was made to change the rules. This took the form of proposed changes to a new elections law, debated by the DPR in July 2017. The opposition Great Indonesia Movement Party (Gerindra) and Prosperous Justice Party (PKS), along with the neutral Democratic Party (DP), sought to remove the threshold altogether and allow an unlimited number of candidates to run for president. After a lengthy debate, the amendment was defeated by the ruling coalition, which consists of the Indonesian Democratic Party of Struggle ( PDIP), Golkar, the National Awakening Party (PKB), the National Development Party (PPP), the NasDem Party, as well as the Hanura Party.

Therefore, the elections law retains the old presidential election thresholds, however the rules governing DPR elections were changed in 2017. Previously, these had required a national vote share of at least 3.5% for a party to qualify for seats in the chamber – a rule intended to minimise the number of parties standing. Some 48 had run in 1999, before the rule was introduced, while currently just 10 hold seats. The threshold also works against parties defined by narrow ethnic or religious interests. The new law increases this threshold to 4%, with this likely to further diminish the number of parties gaining seats in 2019.

HEADING TO THE BALLOT BOX: With these disputes over the rules settled – at least for now – the stage has been set for the 2019 elections. As of October 2017, a potential re-run of 2014 looked likely in terms of the probable major contenders. In 2014 two major blocs formed to nominate presidential candidates, with the largest bloc in the DPR, the Red-White Coalition, nominating Prabowo Subianto – a businessman and former lieutenant general from the rightist Gerindra Party – for president, along with Hatta Rajasa from the moderate Islamic PAN as vice-president. The minority Outstanding Indonesia Coalition nominated former Jakarta governor and PDI-P candidate Joko Widodo for president and Jusuf Kalla, widely associated with Golkar, for his vice-president.

In the election, the Widodo/Kalla ticket won 53.15% of the vote to Subianto/Rajasa’s 46.85%. President Widodo is widely expected to run for a second term in 2019, but as of November 2017 he had yet to officially declare his candidacy. This has not prevented Golkar, the PPP, NasDem and Hanura from announcing their support for his candidacy, even if the PDI-P itself has still to officially endorse him.

The incumbent’s popularity remains high. Opinion polls carried out by both the Jakarta-based Saiful Mujani Research and Consulting and the Centre for Strategic and International Studies in September 2017 found his approval rating stood at 68%. The president has helped turn his minority coalition in the DPR into a majority, with over two-thirds of the seats held by parties supporting his presidency, giving him a strong base within the legislature. The 77-year-old vice-president Kalla has announced that he will not be retiring. This raises questions over the potential running mate for President Widodo, should he decide to stand. Kalla’s successor will likely be a member of a different party, as the vice-president position has traditionally been awarded as part of the coalition-building process. Golkar itself has said that it will give President Widodo a free hand in selecting a running mate.

The president’s main rival in 2019 is widely expected to be Subianto. His popularity has been falling in recent times, with opinion polls showing him trailing President Widodo by between 13 and 27 percentage points. However, these polls may be overstating the support for the incumbent, with uncertainty arising from the events surrounding the elections for the governorship of Jakarta, held in February and April 2017.

CONTENTIOUS BALLOT: After his presidential election success in November 2014, President Widodo turned over the office of Jakarta governor to his deputy, Basuki Tjahaja Purnama – commonly known as “Ahok” – who then ran for election in 2017, with President Widodo’s backing and the support of a majority in the Jakarta regional parliament. In the first round, held in February, he came out two percentage points ahead of his closest rival, Anies Baswedan, who was supported by Subianto’s Gerindra and the PKS. Baswedan is a former education minister in President Widodo’s government and moderate Islamic academic.

The campaign was, however, blighted by sometimes inflammatory rhetoric. Purnama’s status as not only governor, but also a member of a “double minority” – he is both ethnic Chinese and a Christian – had earlier been seen as a sign Indonesia had embraced pluralism and left behind sectarianism. Yet this proved overly optimistic, as the campaign descended into often heated ethnic and religious debate. Remarks made by Purnama in a September 2016 speech in which he questioned interpretations of a Quranic verse led to charges of blasphemy being laid against him. This controversy grew during the campaign, with the second round seeing Baswedan winning the vote by 57.95% to 42.05%. Purnama was subsequently found guilty of blasphemy and sentenced to two years imprisonment.

FALLOUT: The campaign caused widespread concern that religious and ethnic strife was on the rise in the capital. The president called for calm, while Baswedan tried to distance himself from allegations that he was exploiting religious and ethnic schisms. In October 2017, however, at his inauguration with deputy governor, Sandiaga Uno, Baswedan caused controversy by referring to his election as signalling a time when “prubumi” – a word denoting the original inhabitants of Indonesia – could be hosts “in their own home”. The reference was widely thought to be exclusionary, although the new governor said that the reference was to the country’s freedom from Dutch colonialism.

As a response to heightened religious tensions, the president moved against the hard-line Islamist group Hizb ut-Tahrir Indonesia, disbanding it in July 2017. This was due to its alleged role in organising sectarian protests against Purnama during the elections. This was also after the president issued a controversial decree making it easier for officials to disband groups considered to be a threat to national security. Some feared such powers might be abused in order to shut down anti-government protest groups, while others saw it as a move to strengthen the position of groups such as Nahdlatul Ulama, the country’s largest moderate Islamic organisation.

After the result, parallels with the presidential elections were also drawn, with Baswedan’s victory widely seen as a victory for Subianto. Gerindra and its allies have since sought to capitalise on their success, eyeing provincial elections in West, Central and East Java scheduled for 2018. The campaign does not appear to have dented President Widodo’s popularity, though Jakarta’s electoral result is likely to benefit the president’s opponents. Indeed, Baswedan is also now being mooted as a possible contender in 2019.

There is still time for new candidates to emerge or frontrunners to stall before Indonesians head to the polls. The provisions in the new elections law on thresholds mean that candidates will have to win the support of several parties in the DPR in order to run. The year ahead will therefore see a great deal of political bargaining, with the 2018 local elections also being likely to serve as a key marker for prospective candidates’ chances, and for whether or not religious and ethnic differences are becoming an important factor in Indonesian politics.

FOREIGN AFFAIRS: A founder of the Non-Aligned Movement and ASEAN, Indonesia is also a key country in the Organisation of Islamic Cooperation and APAC. Among these, ASEAN has emerged as the country’s main foreign policy focus, with the organisation seen as a vehicle for economic development, and for resolving inter-regional issues. In terms of economic integration, ASEAN has been growing ever closer, with January 1, 2016 seeing the launch of the ASEAN Economic Community (AEC), a move to deepen connections and remove barriers to trade. Through ASEAN, Indonesia is also involved in free trade agreements (FTAs) with a variety of global powers, including China, Australia, New Zealand, India, Japan and South Korea.

In January 2017, when Retno Marsudi, the foreign minister, outlined Indonesia’s 14 foreign policy priorities for the year, ASEAN had a role in almost all of them. Top among these was the implementation of the ASEAN Community Vision 2025. This document, signed by the ASEAN leaders in 2015, sets out the path forward for the AEC and its sister projects, the ASEAN Political-Security Community and the ASEAN Socio-Cultural Community. It calls for ever greater cooperation and integration, with a strengthened secretariat and other institutions. The foreign minister also mentioned the East Asian Summit as a key forum for the resolution of regional disputes. This brings together the ASEAN states with eight other Asia Pacific countries, including China, the US, Russia and India.

DISPUTED BORDERS: One prevailing dispute likely to remain on the agenda in 2018 involves overlapping territorial claims in the South China Sea between Vietnam, China, the Philippines, Malaysia, Brunei Darussalam and Indonesia. While Beijing claims almost the whole sea as within its jurisdiction, Jakarta claims an exclusive economic zone in the south of these waters.

In July 2017 this dispute appeared to escalate, when Indonesia renamed the area the North Natuna Sea – a move that angered China. However, Beijing remains a major investor in Indonesia, and the foreign minister stressed that finding agreement on a code of conduct in the disputed sea would be a priority for the year ahead. In October 2017 tensions appeared to be easing, with the announcement of the first joint ASEAN-Chinese naval exercises in the region.

Jakarta has so far adopted a cautious attitude towards China’s One Belt, One Road initiative, anxious to encourage Chinese investment in infrastructure, but also keen that investment is targeted first at meeting Indonesia’s needs (see analysis). Indonesia also has boundary disputes with Malaysia. These involve maritime limits in the Celebes Sea, which is east of Borneo. The foreign minister expressed hope for the expedited settlement of this dispute, as well as the resolution of territorial disputes with Timor-Leste. With the latter country determined to join ASEAN, President Widodo has indicated a desire to resolve these issues and improve relations with Timor-Leste.

EXPANDING TRADE: Elsewhere, Indonesia’s Look East policy emphasises engagement with South Pacific countries and initiatives, such as the Melanesian Spearhead Group, which aims to promote economic growth in Fiji, Papua New Guinea, the Solomon Islands and Vanuatu. Indonesia has been an associate member of the group since 2015 and is also a supporter of the Pacific Island Forum and the Pacific Island Development Forum. Indonesia also sees a priority in the Indian Ocean Rim Association, which it chaired in 2017. The association held its first leaders’ summit in Jakarta in March 2017 and seeks to promote cooperation, trade and maritime security around the whole coast of the Indian Ocean, from South Africa to Australia.

Further afield, the US and Indonesia continue to undertake close military and security cooperation, following a 2010 resumption of US financial and training aid for the Indonesian army. Indeed, relations with the US improved under President Barack Obama. Under President Donald Trump, however, there is greater uncertainty. The US withdrawal from the Trans-Pacific Partnership (TPP) under President Trump has dampened enthusiasm for the TPP from Indonesia, although efforts to revive the deal have led to overtures to Jakarta from Australia and Japan. Nevertheless, Indonesia has decided to continue the pursuit of a series of bilateral trade deals. October 2017 thus saw the ninth round of negotiations on an Indonesia-Australia Comprehensive Economic Partnership, a month after a third round of negotiations on a similar Indonesia-EU Comprehensive Economic Partnership. Regarding the first of these, as of October 2017 there were still outstanding issues over market access and labour flow, yet trade representatives from both sides were confident a deal could be concluded in November.

On the European front, the negotiations are reportedly targeted to conclude in 2018. Bilateral trade with the EU remains low – around $25.1bn in 2016 – yet Jakarta is keen to increase this. Indonesia is also hoping that its improved relations with Europe will assist it in achieving another of its foreign policy goals – the country’s nomination as a non-permanent member of the UN Security Council for 2019-20. Indonesia has been a member of the UN since 1950, and is now seeking to bolster its presence within the organisation. This includes an offer to increase the country’s peacekeeping role, with the deployment of up to 4000 troops as Blue Berets by 2019.

The events of the year ahead look set to be decisive in influencing the outcome of the 2019 elections. Should he choose to stand, President Widodo appears a favourite for the presidency, yet there remains room for other candidates. Building coalitions of parties to pass the necessary thresholds will likely occupy many minds up until April 2019. Many will also be watching to see how the ethnic and religious antagonisms displayed in events surrounding the Jakarta gubernatorial race play out. Provincial elections in Java in 2018 will be a major test case for this. Furthermore, the way in which new powers to disband political organisations are deployed will also be closely monitored both inside and outside the country. Looking overseas, Indonesia will likely continue with a policy of maintaining good relations with its ASEAN partners, while seeking to further bilateral trade deals.

Aware that there are few certainties in geopolitics at present, Jakarta is likely to adopt a cautious approach, both towards One Belt, One Road and efforts to revive the TPP. Domestic politics, however, are likely to dominate the agenda for the government in the year ahead.