Forget Shangri-La, welcome to Indonesia

Shortly after I arrived in Indonesia two years ago, the Australian Strategic Policy Institute praised President Susilo Bambang Yudhoyono for turning the archipelago into a “normal country” at last.

I was ready to believe it. The 2004 election was relatively fair and violence-free, the Aceh and Maluku conflicts had apparently been resolved, and the economy had been rebuilt after the savaging it received in 1998-1999. Terrorism was also being defeated, with no major attacks since 2005 and the arrests of hundreds of Islamist extremists.  The Wall Street Journal summed up the mood in June last year, declaring Indonesia to be an “investment Shangri-La”.

But the longer I stay the more I worry that this progress is only skin deep. When I see Yudhoyono winning plaudits from his peers in forums like the G20 or climate talks, I wonder whether the world really knows anything about this troubled country beyond the recent stellar performance of the stock market.

Elections in July were marred by serious allegations of fraud, the refusal of the defeated candidates to accept the results and an almost total absence of intelligent policy debate. The peace deal in Aceh remains fragile and there is a sinister effort by shadowy armed forces — some say the military — to sow the seeds of renewed conflict. Separatism and religious intolerance continue to simmer in the Malukus. Activist Abaraham Saiya was jailed in 2008 for 15 years for unfurling an outlawed Maluku separatist flag during a traditional dance to welcome the president.

In Papua, the government is accused of pursuing “genocidal” migration policies by flooding the resource-rich, ethnically Melanesian region with people from other parts of Indonesia.

The JW Marriott and Ritz-Carlton hotels in Jakarta were targeted by suicide bombers in July, the first such attacks in four years. Islamist extremists are still allowed to preach hatred and jihad from mosques and Islamic schools across the country, and police have uncovered major new terror cells despite the death of ringleader Noordin Mohammed Top.

The economy has been growing fast on the back of strong domestic demand and commodities exports, but it remains vulnerable to external shocks such as rising food and oil prices. It is also dangerously unbalanced. Forbes magazine reported last year that the 40 richest Indonesians had doubled their wealth in 2009 to some 42 billion dollars.

Meanwhile there is chronic malnutrition among children in East Nusa Tengarra province, and the World Bank estimates that around half the country’s 235 million people survive on less than two dollars a day.

This startling inequality points to perhaps the biggest worry for the economy, and the main reason Indonesia cannot be called a “normal country”: corruption. It is quite simply out of control. Corruption scandals are not just on the front page of Indonesia’s newspapers almost every day, they are usually on pages three and five as well.

Human Rights Watch released a report in December, just ahead of the climate talks in Copenhagen, saying  that between 2003 and 2006 annual revenue lost to mismanagement and corruption in the Indonesian timber industry was equal to total public health spending at all levels of government. Vast tracts of pristine forest are being illegally destroyed and the dirty profits are easily enough to buy the complicity and silence of officialdom, it said.

One of my favourite recent corruption scandals was the effort by the tobacco lobby to change new health legislation. Parliament had just approved a bill which for the first time described tobacco as addictive. But when it was due to be signed into law, that clause had mysteriously disappeared. No one was held responsible for this strange omission, and officials laughed it off as an innocent clerical error. The clause was hastily re-inserted after the story hit the press.

Don’t forget “Lusi” the mud volcano. Independent studies have found that the mud geyser in East Java — which has buried 12 villages, killed 13 people and displaced more than 42,000 since 2006 — was triggered by gas drilling operations of a company linked to influential billionaire and governing coalition member Aburizal Bakrie. The company says a distant earthquake caused the eruption, an excuse swallowed by the government.

Sadly, it goes without saying that no one has been prosecuted for this man-made catastrophe and no one has accepted responsibility. The cost of the clean-up — not that it will ever be done — is estimated at about 4.9 billion dollars and scientists say the volcano could produce enough stinking mud to fill Sydney Harbour twice over in the next 30 years.

Yudhoyono campaigned for the 2004 and 2009 elections on a platform of clean government, but he has failed to seriously reform corrupt institutions or convincingly stand up for whistle-blowers. He recently claimed that a planned anti-corruption rally was actually a front for unnamed forces bent on toppling his government. It is not the first time he has been dismissed as “paranoid” by his critics.

Some observers explain the president’s behaviour in terms of “Javanese culture”, which The Economist magazine described in a recent article as “subtle, indirect and conciliatory”. Failing to punish corrupt officials and reform rotten institutions is actually a very “Javanese” compromise, or so this theory goes.

This is an insult to the millions of Javanese people — not to mention all those Indonesians who do not come from the dominant island — who are thoroughly sick of the graft, greed and dishonesty of their bureaucrats and elected leaders.

As for Indonesia being a Shangri-La for foreign investors, if you have no scruples about corruption, human rights or the environment then Indonesia is not just a “normal country”, it is indeed heaven on earth.

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