Yudhoyono plays politics, takes eyes off reform

By Shaun D. Levine

The unexpected and surprising late-October promotion of Indonesia’s Tourism Minister Jero Wacik to energy minister confirms that President Susilo Bambang Yudhoyono is more interested in electoral results than he is in securing changes to the regulatory environment. The decision also highlights the president’s infatuation with loyalty and exposes his penchant for weaving complex webs of vested interests that further knot these groups into Indonesia’s economic and political fabric. Wacik’s selection provides an excellent look into Indonesian politics and its ongoing democratic transition.

Wacik’s selection is related to two factors: it is a reward for loyalty and helps Yudhoyono access the network of vested interests that dominate Indonesia’s political and economic environment. With the Energy Ministry facing a host of technical and political issues, Yudhoyono could have picked an experienced technocrat with some independence from vested interests. But rewarding loyalty won out-as it often does in Indonesia. After joining Yudhoyono’s Democrat Party (PD) in 2003 Wacik established his credibility by effectively winning Bali for Yudhoyono in the 2004 campaign. His reward was the appointment to tourism minister in 2004. Wacik then repeated the win in the 2009 election. His continued loyalty and close relationship with Yudhoyono’s wife Ani Yudhoyono has now earned him one of Indonesia’s most important ministerial portfolios.

One of Wacik’s greatest challenges will be his lack of industry knowledge. It is a common problem for members of Indonesia’s cabinet, and can result in vested interests securing the advantage given their persistence and political clout. Wacik has admitted he will have to take some guidance from the industry and that could lead to increased cronyism.

Wacik may also be subject to pressure from his contacts. Early in his career, Wacik worked at Astra International, which was owned and controlled by one of the founders of Adaro Coal, Edwin Soeradjaja. Additionally, Wacik is a former classmate of Aburizal Bakrie, who heads the Suharto-era Golkar party and controls Indonesia’s largest coal mining group. These relationships complicate a government decision to purchase shares in a large mining company, pitting political parties and business interests against the government.

Yudhoyono knows these risks, but views Wacik’s business connections as critical for the PD. Wacik’s relationship with Adaro Coal and that company’s influence on policies will lead to increased financial support for the PD in the 2014 electoral cycle. The relationship with Bakrie could also soothe political tensions between Golkar and the PD, where Golkar occasionally acts more like the opposition than part of Yudhoyono’s coalition.

Time may prove to be the ultimate limiting factor for Wacik. The new cabinet’s tenure officially runs from the end of 2011 to 2014; but election noise will pick up in 2013, which, given Wacik’s likely political role during the campaign, gives him only slightly more than a year to run the ministry. As one of Yudhoyono’s valued fund raisers, it is likely that Wacik will be distracted or have to resign as the campaigning and fundraising work for 2014 heats up by early 2013. Wacik’s ties to Bali would also likely see him spending more time there rather than pursuing ministry work.

Shaun D. Levine is an analyst with Eurasia Group’s Asia practice