Indonesia’s New President: What does the future hold?
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A look at Indonesias newly elected President Joko "Jokowi" Widodo and an analysis of the new political landscape and policy outlook.
Transcript of Indonesia’s New President: What does the future hold?
Indonesias New President What does the future hold? July 25th 2014 2 Population: 250 million (4th largest population in the world) GDP: $868.3 billion Projected growth: 5.3% (2014), 5.6% (2015) FDI inflow: $23 billion (2013) The biggest economy in Southeast Asia and ASEAN, accounting for 1/3rd of ASEAN GDP Bain & Co. says by 2030 Indonesia will be worlds 9th largest economy Worlds 3rd largest democracy Worlds largest Muslim majority country Archipelago nation of 17,000 islands stretching 5,150 km The most populous island is Java, where 141 million people or around 60% of the population reside and the nations capital, Jakarta, is located Executive Presidential system and constitutional republic Alongside the presidency, considerable powers rest with the national parliament (DPR) and local governments after a process of decentralization starting from 2001 Indonesia at a glance. 3 CONTENTS 1. Indonesias new president and political landscape 2. The presidential inbox: key issues for Jokowis first 100 days 3. An introduction to our corporate & public affairs practice 4 Man of the people wins Indonesias Presidential Election After an extremely close, tense and dramatic election, Joko Widodo, Jakartas current Governor, was declared the winner of Indonesias Presidential election by the Indonesian Election Commission (KPU) on Tuesday evening. Joko Widodo, or Jokowi as he is popularly known in Indonesia, won 53 percent of the vote to his rival presidential candidate Prabowo Subiantos 47 percent. President-elect Widodo, a former furniture businessman from Solo, central Java, has risen through the ranks of Indonesias decentralized local politics from Mayor of Solo, to Governor of Jakarta to now President-elect of the worlds third largest democracy; most populous Muslim country; and largest economy in Southeast Asia. This is a huge achievement for such a young democracy born after the riots and mass protests which unseated Suhartos New Order regime in 1998, after 32 years of authoritarian rule. It is also a sign that democracy is now fully entrenched in the Indonesian psyche and a rejection of the past. Jokowis presidential rival, Prabowo, previously served as a top General to Suharto and was previously married to his daughter Titiek Suharto. This election has broken with past traditions that have favored old political elites and military generals, and suggests that Indonesias local leaders can now rise to the very top. The election has not been without controversy. A few hours before Jokowi was officially declared the election winner, candidate Prabowo gave a televised press conference denouncing the Election Commission and alleging widespread voting electoral fraud. Although not presenting evidence of this on a scale that would likely make a significant impact, Prabowos camp now will launch an appeal to Indonesias Constitutional Court, which will rule on the evidence and make a final verdict - which cannot be overturned - by August 20th. Orthodox opinion is that a ruling that overturns the KPUs decision is unlikely given President-elect Widodos 8 million vote margin, however, this is Indonesia. The old parliament (DPR) staggers on until September 30th and is dominated by Widodos political enemies; they still may plan to cause all manner of issues that could disrupt the current process as it is. President-elect Jokowi is due to be sworn in on October 20th, a few days after Indonesias new legislators take their seats in the Indonesian parliament on October 1st. The new government will then have to work with the new parliament to get legislation through, and this is where the new challenges will truly lie (as if it has been easy by then!) Indonesian parliamentary politics is multi-party and based on loose coalitions and compromise. This is a democratic system that was constructed to provide checks and balances on presidential power and prevent a return to centralized and authoritarian presidential rule. Jokowi will have to work with the new parliament to govern in a truly effective way. Between today and October 20th political alliances will rise and fall and it is yet possible that we may see a completely different parliamentary coalition supporting the new President. On Jokowis desk when he walks into the State Palace will be a number of policy challenges, among them regulatory uncertainty in both the mining and oil and gas sectors, continued widespread corruption, bureaucratic inefficiency and infrastructure bottlenecks, and an economy which has slowed over the last year. Jokowi was also elected on a mandate that he would provide better basic services in education and health for Indonesias poor, and tackle grinding poverty which still affects millions across the archipelago, especially in more rural areas. We expect healthcare to be the centerpiece of his first 100 days, but equally he must also tackle the level of fuel subsidy which is about to break its statutory limits (as a percentage of GDP): technically he can be impeached if this happens, but Jokowi has already pledged to cut the subsidy in his first 100 days in office. It has been a dramatic election season, but the political drama is only just beginning. Stephen Lock CEO Edelman Indonesia & Head of Public Affairs, Southeast Asia 5 The Indonesian Election Commission (KPU) declared on July 22nd that Joko Jokowi Widodo, of the Indonesian Democratic Party of Struggle (PDI-P) has won Indonesias 2014 presidential election, but some uncertainty still remains as the rival candidate, Prabowo Subianto of the Great Indonesia Movement Party (Gerindra) has now filled for an appeal at Indonesias Constitutional Court. The Indonesian Constitutional Court is controversial and lacks public trust since the recent life imprisonment of the head of the former Constitutional Court for corruption in rulings over election disputes. The Courts final verdict could well resemble a replay of the US presidential election in 2000 where the Supreme Court ruled on the next president. The Constitutional Courts verdict must be given by August 22nd before the inauguration of the new president on October 20th. Political uncertainty & the Constitutional Court Resolving the Uncertainty: The Timeline August 20th: Date by which Constitutional Court must rule on Prabowos lodged appeal October 1st: The new Indonesian parliament (DPR) assembles October: Likely announcement of key ministries just prior to accession of the new president to office, with some horse-trading for final ministerial and vice-ministerial posts completed as DPR ruling coalitions shift and finalize. (There is an outside chance President-elect Widodo will have a minority coalition in the DPR) October 20th: Joint session of both parts of parliament confirm the President of the Republic of Indonesia October 20th President-elect Widodos first five year term begins Joko Widodo: Indonesias 7th President Joko Widodo has been a true outlier of the Indonesian political scene. From humble beginnings as a successful furniture retailer, Jokowi, as he is popularly known, was the highly successful Mayor of the relatively small city of Solo (since 2005) where he transformed a city racked by crime and a reputation as a terrorist hotspot into a regional center for arts and culture, which has started to attract international tourism. His campaign against corruption earned him the description of being the most honest politician in Indonesia. Joko Widodos victory over Jakartas incumbent governor Fauzi Bowo in 2012 was largely due to his track record as mayor of his home town and his reputation for honesty and humility. This reputation has carried him through to the state palace in a country where politicians are often distant from the people in their daily dealings and frequently corrupt. During his time in Jakarta, his hands on, street politics style of governing has won him plaudits and great affection. Jokowi is famous for spot checks and frequent daily ground visits to communities, government institutions and projects. This style has also been crudely replicated by other national level politicians, keen to obtain a more populist image. During his time governing Jakarta, his introduction of health cards (where the poor can receive free access to basic healthcare) has been his most lasting legacy. He has also made inroads in shaking up bureaucracy and improving Jakartas woeful public transport system, with the introduction of upgraded and a greater number of Trans-Jakarta buses, and the start of an ambitious MRT system. Although in power for a short time, his national popularity has remained strong and resilient, despite a dent in his poll ratings during a highly competitive and controversial election race. He managed to endure attacks on his character and smear campaigns, and prove himself capable in presidential debates, eventually winning the election with 53 percent of the vote, despite a highly organized and well-funded Prabowo campaign. The nation now expects change and for him to bring his can do attitude and municipal management to the national level. He is likely to make social issues such as healthcare, education and combating poverty the major focus of his administration. Fighting corruption and reforming bureaucracy will also be on the agenda; Indonesians will expect to see progress on this front, after a previous governing administration that was embroiled in multiple corruption scandals. A look at the new ruling party: the PDI-P The PDI-P, one of the most successful parties in the Indonesian democratic era, is closely linked to the political life of its chairperson Megawati Sukarnoputri, the daughter of the countrys independence leader and first president Sukarno. Her first election to chair the Indonesian Democratic Party in 1993 led to a split and the affix Perjuangan = struggle. Aeran Ismail Director, Corporate and Public Affairs Megawati Sukarnoputri was vice president of the republic from 1999 to 2001 and (after president Abdurrahman Wahid had to step down) president from 2001 to 2004. The party has a functioning infrastructure with branches all over the country but with strongholds and higher election results in Java and Bali. After 10 years in opposition, Megawatis PDI-P is now in power with Joko Widodo as the President of Indonesia. Megawati will still wield considerable influence behind the scenes and will remain as a key political power broker. She also may act as a gatekeeper to Indonesias new president. A key issue when Jokowi takes office will be how independently he can act and if Megawati is really willing to take a back seat. 9 An overview of Indonesias new political landscape In terms of the outlook of a Jokowi government and the likely implications for business, some nationalist and protectionist policies will remain in place, but many analysts predict that Jokowi will continue to govern in a moderate and open style. Jokowi, while still being nationalistic by western standards, is viewed as more open in his economic approach. It is telling, for example, that the Indonesian stock market shot up when the majority of quick count polls after the July 9th election stated that Jokowi had won and again with the declaration of his victory by the Electoral Commission (KPU) on July 22nd. Beyond this, Indonesias political landscape is further complicated by a geography that spans over 17,000 islands and decentralized democracy across 34 provinces and 510 districts, with district and provincial leaders elected directly at the local level and entrusted with the power and responsibility to provide the majority of services to their electorates. They also have a number of local legal powers which can complicate the regulatory process. Many businesses entering Indonesia for the first time find it hard to navigate Indonesias complex system of decentralised governance and confusing, and often contradictory, regulations. Building alliances and engaging with relevant stakeholders in the new government will be vital for business success. 10 The new Indonesian parliament (DPR) Of the total 560 seats in the House of Representatives, PDI-P secured 109 seats. PDI-P are backed by Hanura, NasDem and PKB, while for the time being the opposition are made up of Golkar, Gerindra, PPP, PKS, PAN and Demokrat. Indonesias next government will not be dominated by a strong majority, instead it will be a government of multiple coalitions once more. This means that a Jokowi administration, will be much more constrained in pushing new policies and reforms through the DPR and getting stuff done. He will have to compromise and make deals with other parties. The new parliament will be challenging for the new administration to work with. This also makes radical or large-scale reforms much more unlikely. Opposition parties to the biggest party, PDI-P, also recently passed a revision to the law on legislative assemblies (UU MD3) which means that the PDI-P (although the largest of the parliamentary parties) will not automatically obtain the powerful and important speaker post, as has been the norm in previous governments. This just goes to show the fractious future that the new parliament will face. This said, we have seen signs that current coalitions are likely to realign and evolve once Jokowi takes the reigns of power. The expectations that a Jokowi government can push through new reforms and shake-up Indonesias political process maybe optimistic. Politics and policy making will very much be the art of the possible. Source: Jakarta Globe Limit foreign banks share in Indonesia and instead promote the principle of reciprocity Special banks for farmers and SMEs JOKOWIS CAMPAIGN PROMISES Economic Reforms Construct sea toll roads Irrigation dams Promote industrial development for plantation owners and midsize businesses Infrastructure Reevaluate FTAs Manage food imports A revision of oil and gas laws Restrict outsourcing in state-owned enterprises Streamline business licenses Mining operations to benefit local communitiesPolicy Distribution of agricultural lands (9 million hectares) for 4.5 million families Development and improvement of irrigation on 3 million hectares of rice fields Construction of 25 dams and 1 million hectares of new agricultural land outside of Java Provide clean water to farmers homes with subsidies Regeneration of 1,000 villages Agriculture Utilize renewable energy-based technologies Improve oil and gas infrastructure Achieve national energy security Transfer of fuel to gas Cut the energy subsidy Energy Sustainability Create 10 million new jobs Promote Creative and Digital industries Jobs 11 Improve professionalism in the public sector Raise salaries and improve welfare of civil servants, military, and police Provide universal access to education with an Indonesia Smart Card Provide free health services with an Indonesia Health Card Accessibility Reform public service through empowerment of villages and sub-districts Reform law enforcement agencies Utilize IT for public transparency Establish a National Integrity System Anti-corruption 12 Based on the general sentiments of the investor community, analysts deem Jokowi to be market-friendly, earning a reputation as a hands-on leader and problem solver. While his party has a nationalist agenda, analysts predict that Indonesias need for foreign investment to maintain and accelerate growth will mean that there will be no drastic changes towards greater nationalism. Hence the election rhetoric on nationalism is likely to exceed actual policy action. As an example, Taiwans Foxconn Technology Group, the worlds largest electronics contract manufacturer and one of the major suppliers to Apple Inc., has made it clear that its chairman is in favor of dealing with Jokowi to bring the companys giant investment to Indonesia. The market and investors are therefore optimistic for the future Industry and business outlook 13 The presidential inbox: key issues for Jokowis first 100 days The World Bank Logistics Performance Index 2014 Indonesia is currently 53 in the word Transparency International Corruption Perceptions Index 2013 Indonesia ranks 114 globally Infrastructure Indonesian logistics costs are amongst the most expensive in the world. It is 4-5 times more expensive to ship a container within Indonesia from Jakarta to West Sumatra (a shorter distance) than it is from Jakarta to Singapore. This gives an idea of the scale of the problem. The problem is not just confined to roads and ports, however, but other critical areas. Indonesias top five international airports, which include Jakartas Soekarno-Hatta, are all under immense strain and have been operating at over 100% capacity for some years. A full 15 million households have no access to electricity. The Indonesian Chamber of Commerce (KADIN) states that logistics costs in Indonesia have already reached over 24 percent of total GDP, compared to neighboring Malaysia in which costs are around 15 percent. Globally, Indonesia currently ranks 53 on The World Banks Logistics Performance Index, significantly behind regional neighbors Thailand, Malaysia and Vietnam. All this points to a desperate need for progress to be made. Three major issues for business poor infrastructure, rampant corruption and an uncertain legal and regulatory environment Corruption In 2013, Transparency International ranked Indonesia 114 based on corruption perception by both domestic and foreign observers. Despite the unfavorable ranking, Indonesia is one of the few countries in the Corruption Perceptions Index that shows a steady and marked improvement, moving 4 places up from a 118th ranking in 2012. The work of Indonesias Corruption Eradication Commission (KPK) has also had a number of high level successes, including successfully prosecuting leaders in the current ruling party and government institutions. Indonesia's free press has also been fearless in investigating and raising corruption allegations in the public domain. However, the cost of corruption in Indonesia from 2001-2009 was Rp 73.1 trillion (about US$7.86 billion). Recently, the Indonesian Corruption Watch reported that Indonesia lost as much as Rp 7.4 trillion (US$632 million) alone to corruption in 2013 this is probably a very conservative figure. Regulatory & legal uncertainty Indonesias investment climate continues to be plagued by regulatory and legal uncertainty. Government requirements often compel foreign companies to do business with local partners and to purchase goods and services locally. As of 2013, Indonesias Investment Law restricted foreign investment and increased foreign equity limitations in sectors such as telecommunications, pharmaceuticals, film and creative industries, construction, horticulture-related businesses, and distribution and logistics. Over the past several years, the Indonesian government has introduced regulatory changes to increase government control in the energy and mining sectors. The regulatory changes have raised costs for foreign businesses and questions about the sanctity of contracts already in force with the Indonesian government. The ongoing process of transferring investment-related decisions from central to provincial and district governments has helped reduce some burdensome bureaucratic procedures, but also led to inconsistencies between national, regional and local laws. The World Bank Doing Business 2014 Indonesia ranks 120 globally 15 Investment: As Indonesia pursues the objective of self- sufficiency, Indonesia has intensified domestic discussions of a revised Negative investment List. Industry and business complaints that need to be addressed include investment uncertainty, with the recent cancelling of all bilateral trade treaties and the bungled mineral ore export ban, which has worried foreign investors. There is still positive interest in Indonesia as an investment destination though; Ernst and Young plan on investing $61 billion in Indonesia over the next 3-5 years, granted the investment environment is conducive and welcoming. Mining: The industry is concerned with the imposition of a ban on mineral ore shipments, designed to force miners to build smelters and processing plants. Oil and gas: Government Regulation 79, signed in December 2010, allows the Indonesian government to change the terms of certain existing production sharing contracts, while eliminating the tax deductibility of certain expenses, change the terms and criteria for cost recovery, and place limits on allowable costs for goods, services, and salaries. The oil and gas industry is looking for more collaboration and certainty from the next government. Pharmaceuticals: Indonesia requires foreign pharmaceutical companies to manufacture locally or to entrust another company that is already registered as a manufacturer in Indonesia to obtain drug approvals on its behalf. It also contains a technology transfer requirement. How the new government will approach these issues. remains unknown Foreign ownership: Foreign ownership of banks is capped at 40 percent. Foreign ownership of telecommunication providers is capped at 65 percent for suppliers of value-added and mobile telecommunications services and 49 percent for suppliers of fixed network services. Labor issues: The low productivity of the workforce amid demand for higher wages has increased tensions in manufacturing based industries. The minimum wage has increased by 30 percent from 2010 to 2013, the highest in the region, compared to Thailands 14.2 percent, China 8.4 percent, Vietnam 6.7 percent and Malaysia 3.3 percent. Indonesias labor productivity on the other hand only grew by 2.8 percent per year from 1980 to 2012, while Thailand grew by 3.6 percent. Issues for industry: A brief summary 16 Uncertainty facing the mining industry The mining sector is of vital importance to Indonesia, employing millions of people across the country, especially in less developed remote areas and makes a significant contribution to the countrys GDP and import/export balance sheet, however, it has faced a torrid time of late since the imposition of a mineral ore export ban and a prohibitively high export tax in January, designed to encourage miners in Indonesia to build smelters and refine minerals in country. This has led to a halt in production and the cessation of shipments. The law though is widely perceived to have had a detrimental effect and in fact caused miners to rethink investments and the commercial viability of current production. Thousands of jobs have already been cut or are in limbo; predicted state losses amount to $4 billion per year and have put pressure on the rupiah; and rural regional areas have seen investment dry up and construction projects grind to a halt, hurting local economies and regional development. A key question now is how a Jokowi administration will approach the issue and the sector in general. There are signs that a change in approach is afoot. Jokowi has announced that he wants to sit down with the mining companies and other stakeholders to resolve the problem and put an end to the dispute in order to get the sector going again. Jokowi has articulated a more conciliatory and collaborative approach to the industry, stating that he would sit down with all players - industry stakeholders and regulators - to find a solution. Jokowis comments have been interpreted as a sign that he will reconsider the ban on unprocessed ore exports and make it easier for firms to build smelters. Economic advisers to Jokowi have also criticized the policies of the current administration towards the industry and for creating the conditions that the sector finds itself in today, reiterating a need for open exports and government support to create a more conducive conditions for production and value added investment. Whether Jokowi can find a middle ground between creating a more positive environment for foreign mining firms whilst still appeasing those who tend towards resource nationalism remains to be seen. 17 Revisions to the oil and gas law Indonesias oil and gas sector is another vital area for the countrys economy, contributing around 8% of Indonesia's GDP and over 28% of national revenues or an average of $35 billion annually. One of the big needs from the industry will be for the new Jokowi government to address the current oil and gas law and give more certainty to investors. The sector currently has ongoing concerns over contract sanctity, legal and regulatory risks, corruption, land taxation, cost recovery and renewal of existing production sharing contracts. Indonesia needs $20.1 billion in annual investment or $201 billion over the next 10 years to maximize existing and future production opportunities, an investment level difficult to maintain without a conducive regulatory environment and strong government backing that addresses industry concerns and gives investors certainty over long term, multimillion dollar investments in exploration and technology. In recent years, the industry has seen year-over-year production declines with increased costs to explore essential new technologies needed to maximize existing projects and bring online new high-risk projects in outlying areas lacking in infrastructure. A more supportive regulatory environment from a Jokowi government will therefore be a key ask and expectation for the sector. 18 Cutting the fuel subsidy Indonesias rapidly growing middle class are fuel thirsty, with millions of new cars and motorcycles coming onto the road each year. This is currently supported by an unsustainable untargeted energy subsidy which mainly benefits richer Indonesians and is estimated to cost the government $33 billion in 2014 around 15% of the state budget (more than infrastructure, health and education spending). It is also the main reason for a growing current account deficit predicted to be 2.8% of GDP this year. Gone are the 1980s were Indonesia was a leading oil exporter, today it imports oil at an increasing cost. These factors and the heavy burden on the state budget have led Jokowi and his Vice President, Jusuf Kalla, to declare that the new administration will cut fuel subsidies in their first 100 days of office. Cutting the fuel subsidy is not only vital for Indonesia to balance the books, it is also a statutory requirement. Currently the law caps the state budget deficit at 3% of GDP, so with the increasing cost of the subsidy and more and more fuel consumption, plus the threat of global oil price rises and rupiah depreciation, the next government will have to cut the subsidy. Alternative options include cutting spending in other areas, which is equally difficult considering Jokowi has pledged to increase spending on social issues and improve healthcare and education provision. It would also be detrimental to Indonesias overall development and an equally difficult proposition to sell to the electorate. The next administration will have to approach the fuel subsidy cut with care, as it was increases in fuel prices that helped fuel the economic volatility that eventually unseated Suharto and the New Order regime in 1998. When current President Susilo Bambang Yudhoyonos administration cut the fuel subsidy last year, there was also widespread protests. It is a political hot potato, but a necessity supported by all reputable economists and analysts. Jokowi has pledged that he will gradually reduce the fuel subsidy over a four to five-year period. Kalla has also said that it would be an economic priority for the new government once they take office in October. Having Kalla as his Vice President will benefit Jokowi, as Kalla is an experienced policy maker and understands the sensitivities involved from when he also served as Vice President to current President Susilo Bambang Yudhoyono during his first 5 year term in office. Indonesias energy supplies are still fuelled by oil, gas and coal, and the current government and the next administration will face the major policy challenge of increasing energy supply to keep up with demand energy consumption is expected to rise by almost 30% by 2020. Support for fossil fuel burning power stations, especially coal, is still strong; the outlook for other energy sources, such as geothermal and renewables looks less certain. Image: basibanget 19 ASEAN & the ASEAN Community 2015 ASEAN and the upcoming ASEAN Community 2015 will present an enormous opportunity but also an enormous challenge for Jokowi and his administration. It is also of note that the success of ASEAN is intrinsically linked to Indonesias willingness to lead and participate. ASEAN is a political and economic organization made up of 10 Southeast Asian countries, but Indonesia is critical to its influence and relevance, as the biggest country, biggest economy and biggest population in ASEAN. How far Indonesia is prepared to work with the group really does set the pace for ASEAN integration and its future. Jokowi has been generally favorable in his public statements to the ASEAN Economic Community, stating that Indonesian companies must compete to gain a bigger regional and international market share. He said the best way for Indonesia to compete in ASEAN and take advantage of the opportunity was for the government to support enterprise and protect local business by further empowerment through expediting licensing procedures and administrative processes so that Indonesian businesses would be better placed to compete. However, Jokowi will be acutely aware of the sensitivities and concerns that Indonesian businesses (especially Small and Medium Sized Enterprises which employ the majority of the population) have over allowing foreign companies greater market access to do business and sell goods. It is unlikely that he would change track in any fundamental way from the way the Indonesian government currently engages with ASEAN; some protectionist measures will remain in place especially in sensitive national industries, such as banking and finance. We know as well from the Edelman Trust Barometer 2014 results for Indonesia that only 1 in 20 Indonesians want their government to focus on creating free and open markets (thats much lower than the global average). Opening up markets further still is unlikely to be a particularly popular policy, although a middle ground maybe found. It is also worth noting that even if politicians speak in nationalistic tongues at home, the regional and global reality means further ASEAN integration and connectivity is set to continue. ASEAN political and business leaders will be looking to see how Jokowi addresses the issue and the choices he makes in the months ahead. 20 Making universal healthcare a reality Jokowi has recognized that Indonesia faces two major problems: education and health. As part of his strategy and campaign promise, Jokowi has reaffirmed his commitment to provide free universal health care and education for all residents. Dubbed the Indonesia Health Card, i.e. Kartu Indonesia Sehat or KIS for short, it aims to provide greater access to medical checkups and treatment for underprivileged residents. Free healthcare may also lesson the negative political impact that will come with his promised cut in the fuel subsidy, which will inevitably cause some friction. On the issue of the health card, many skeptics have argued that KIS would conflict and overlap with the current Social Security Agency system, i.e. Badan Penyelenggara Jaminan Sosial or BPJS for short. In fact, Jokowi states that KIS would strengthen and refine the programs of BPJS, in which he explains that KIS is merely an extension of BPJS. With the BPJS card, it is region-determined based cover depending on where the card was issued. The KIS program will utilize the e-KTPs (national identification card) database to ensure true national cover. The government will bear the cost for the wellbeing of Indonesias poorest citizens. The cards will guarantee Indonesian citizens receive health care, regardless of economic status. If implemented effectively and in full this could well be transformative for Indonesia on par with the introduction of truly universal healthcare at the point of delivery and the birth of the NHS in the UK. 21 Improving education Jokowi has promised to implement free universal education up to 12 years old and put an end to parents worries that their children cannot receive basic education due to financial constraints. Similar to KIS, the Indonesia Smart Card, i.e. Kartu Indonesia Pintar or KIP, aims to provide universal education for all citizens, including farmers, fishermen, laborers, and people with disabilities. In order to improve Indonesias overall human resource quality, Jokowi also aims to also launch the Indonesia Smart Card, i.e. Kartu Indonesia Pintar, or KIS. (The only difference between the KIP and School Operational Assistance, i.e. Bantuan Operasional Sekolah or BOS is that KIS uses a card system which makes it clear who receives free education.) Jokowis love of the smart card is based on his success as Governor of Jakarta and his introduction of similar cards for health and education access, which proved to be highly effective and popular. Jokowi has also pledged to provide scholarships for students to continue higher education who currently cannot afford this due to financial constraints, yet score highly in academic tests. Health and education are likely to be central areas of focus for the next administration and are where some of their most ambitious pledges have been made. An introduction to our Corporate & Public Affairs practice 23 Our Corporate and Public Affairs practice in Indonesia Edelman Indonesia offers a full suite of corporate PR and public affairs expertise The Edelman CPA Practice dedicated professionals including former journalists, policy and industry specialists, crisis and issues counsellors, lobbyists and market entry communications experts30+ Corporate Reputation & Strategy CSR & Sustainability B2B Communications Community & Employee Engagement Government Engagement & Public Affairs Crisis & Issues Management 24 Core public affairs services to understand Indonesias new government - Stakeholder mapping - Issues, policy analysis and briefings - Policy monitoring - Risk assessments - Government relations and engagement - Coalition building and campaigns - Corporate reputation and public visibility - Crisis and issues management 25 A selection of our clients Our Senior Team Stephen has almost two decades of international experience in public affairs including risk and stakeholder mapping; engagement; legislative lobbying and government relations. Having lived in emerging markets for over a decade, before joining Edelman in South East Asia, he was Managing Director, Eurasia and Global Co-head of Public Affairs for the worlds other large independent PR firms. He has lived and worked in the UK, Brussels, Italy, the Caribbean, Russia and Turkey, before moving to Indonesia. He travels widely on client government and stakeholder management projects across South East Asia. His sector expertise includes oil and gas; banking; disease awareness and education; and pharma market access and pricing. In several countries he has led teams on competition, intellectual property and privacy issues and handled projects around foreign direct investment. He has co-drafted legislation and advised on national parliamentary enquiries and EU investigations. He has responded to political-driven media and consumer crises with programs integrating government relations, PR, social media and stakeholder outreach. He has managed and co-authored research ranging from retirement income funding; carbon emissions trading; the economic impact of Hepatitis C; smoking cessation; consumer goods pricing and financial regulatory reform. He writes, trains and lectures regularly. Stephen graduated in Law from Cambridge University and 1995-1997 advised the UKs Labour party on business relations for the 1997 General Election. He started his career as an investment banker at Lazards and has professional accountancy and London Stock Exchange qualifications. Stephen Lock CEO Edelman Indonesia & Head of Public Affairs, Southeast Asia Bambang Chriswanto Vice Chairman and Head of Consulting 28 Bambang has over 18 years of experience in public relations, strategic communications, organization development and executive training. For more than eight years with Edelman, he has provided communication and media counsel to CEOs and management teams from many corporations in various industries, including the public service sectors. In addition to his work experience in public relations consultancy covering such key areas as Crisis/Incident Management, Employee Engagement and Social Engagement, Bambang gained extensive experience in stakeholder management and public relations when he worked as senior corporate affairs managers with Caltex (currently known as Chevron Pacific Indonesia), Coca-Cola Bottling Indonesia, and BHP Billiton. In his current position, Bambang provides communications and strategic counsel for all practice groups of Edelman Group of companies in Indonesia across many industry sectors. He is also the program director and one of the lead trainers in media skills/spokesperson development programmes, behavior change communications, and crisis management. Bambang holds a bachelors degree in English linguistics from IKIP Malang in Indonesia and later attended graduate studies in communications management from the University of Indonesia. Bambang has an MBA degree in Strategic Management from Prasetiya Mulya Business School, one of the leading business schools in Indonesia Jake Drake brings to the firm more than 20 years of strategic communications experience in corporate brand and reputation management, social responsibility and crisis and issues management In Indonesia Jake has led communications initiatives involving a wide range of issues critical to the global reputation and continued economic development of Indonesia and its leading companies. That includes work on social, environmental, fair trade, and economic development issues in partnership with the Indonesian Ministry of Trade and Ministry of Forestry, the U.S. consulates, Indonesian chambers of commerce, and business support associations in Australia, North America and across the EU, as well as private companies such as NALCO, the U.S.-based leader in clean water technology, and Singapore-based Carbon Conservation, an environmental consulting group promoting worldwide investment in REDD and REDD+ programs in Indonesia. Jake has worked in a wide range of industries, including pulp and paper, forestry, oil and gas, energy services, commercial real estate, professional and financial services, health care, transportation, telecom, consumer and enterprise technology, mobility, and new media/entertainment. In Asia he led regional communications strategy, CSR and social media campaigns for Sinar Mas Forestry and Asia Pulp & Paper, Dell, ExxonMobil, Paul Capital and Bacardi Brands as well as country-specific initiatives for Merck, Pfizer, Pepsi Co., Unilever, Hilton, the Womens Tennis Association and Sony Pictures Home Entertainment. Other past clients include Shell Oil, Starbucks, Sony Pictures, Sony Ericsson WTA Tour, Pioneer Electronics, RadioShack, Mattel, Sony Ericsson, THQ, Paramount, Fox, Genentech, Medtronic, British Airways, Del Webb, Pulte Homes, Lucent Technologies and Illinova Energy Partners. Jacob Drake Head of Corporate and Public Affairs Arwan Shah Bin Ismail (Aeran) Corporate and Public Affairs Director Aeran is a Singaporean that has been based in Indonesia for the last 12 years. Holder of an undergraduate degree in Network Computing from Monash University, Australia, he specializes in Crisis Communications and in the Lobbying of Regulatory Affairs in the Technology practice, and he is also fluent in brand and social media engagement. Aeran has been involved in conducting training for C-Suite executives and Senior Managers on Media Communications, Crisis & Issues Management and Change Management. His career began 11 years ago as a Technology and New Media Project Consultant for Hill and Knowlton in Melbourne where he worked for 3 years, before moving on to Microsoft Vendor (Raffles Consultancy) where he took on the role of Sales/Public Affairs Director in 2004. During his tenure with Microsoft, Aeran helped the company in integrated digital communication strategies and drove strategic online marketing campaigns to engage consumers. He also spent a good amount of time training senior government officials on I.T. Infrastructures, Evolution of Technology and Technology Divide, Intellectual Property and Data Centers to create awareness amongst legislators on the importance of the need for governments to be at the forefront of technology. Aeran has represented Microsoft (Indonesia and APAC) both in the U.S. and in the Asia Pacific region for their Educational and Innovation programs and the implementation of them with various ASEAN Educational bodies. Aeran has also successfully overseen executive training and counseled representatives from Acer and INTEL Indonesia. CONTACT Stephen Lock, CEO Edelman Indonesia & Head of Public Affairs, Southeast Asia Email: [email protected] Phone: +62 21 721 59000