Indonesia’s quiet success explained

Resurgent Indonesia: From Crisis to Confidence By Vasuki Shastry (Straits Times Press, 2018, 194 pp) Reviewed by Salil Tripathi

Indonesia’s quiet success explained

Often called the world’s largest “invisible” country, Indonesia has a magical hold on foreign correspondents who have reported out of the archipelago. As if to make up for that invisibility, many of the journalists, all privileged temporary residents with the ringside view of a correspondent, have written excellent accounts of their time in Indonesia, interpreting the complex country by demystifying it. With its wayang kulit (shadow puppetry) and dalangs (puppeteers), dwifungsi (the military’s dual political-security function under former President Soeharto), dukuns (spirit mediums) and gotong royong (the tradition of mutual self-help), there is much that’s enchanting, magical and exotic in Indonesian society to be explained to the uninitiated. 

My former colleagues at the now-defunct Far Eastern Economic Review – Hamish McDonald, Adam Schwarz, Michael Vatikiotis, John McBeth and Sadanand Dhume – as well as the epidemiologist Elizabeth Pisani, who was formerly a Reuters correspondent in Indonesia, have written knowledgeably and perceptively about the world’s most populous Muslim-majority nation. To that list, now add Vasuki Shastry, a former correspondent for Singapore’s Business Times and later an official at the International Monetary Fund, who is now a senior bank executive in London but has stayed engaged with Indonesian and Asian economic affairs. 

Shastry’s account, “Resurgent Indonesia,” is actually two books in one. He has seen Indonesia from two perspectives: first, as a reporter covering the most important story of Indonesia in the past quarter century – the 1997-98 financial crisis and Soeharto’s fall, which I too witnessed and covered for the Review – and later, as an IMF official when the fund was designing policies and programs to help Indonesia overcome the crisis. Three threads run through Shastry’s writing: his affection for the Indonesian people; his thoughtful critique of what went wrong; and his reliance on economic evidence to advance his analysis and argument. We see two distinct narratives in the book: the color and drama Shastry saw as a reporter, and his work as a participant after he became an international bureaucrat. He does the former with a keen eye; he does the latter by quoting widely from analytical reports, academic papers and speeches. The reports he cites are not written as engagingly as he himself writes, which slows the pace of the text; it springs to life again once Shastry writes in his own voice. 
I vividly recall the day Soeharto resigned in May 1998. I was with my colleague and friend, the Jakarta-based correspondent John McBeth, on the terrace of Wisma Antara, the building where the Review had its office, surveying the city sprawled around us. There were flames everywhere, from Glodok, West Jakarta’s Chinatown, to the shopping centers in the east, as protesters attacked businesses close to Soeharto or the property of ethnic Chinese-Indonesians, who the demonstrators believed had disproportionately benefited during Soeharto’s rule. 

Shastry recalls that period with calm prose, not missing any of the drama while recounting Indonesia’s very real economic crisis. Indeed, its political crisis was the consequence of an economic one, and Shastry’s account vividly recreates the slow-motion disaster. He writes about the origins of the crisis (the mismatch between the banking system’s assets and liabilities, and the impossibility of maintaining a fixed exchange rate at a time of increasing private, short-term debt repayments), linking those to the political ramifications brought on by a crony-infested economy; all compounded by the El Niño weather effect that led to a fall in food production. Together, these forces destroyed the Soeharto presidency after more than 30 years.

Shastry is critical of the cynicism within Soeharto’s inner circle. Some businesses and politicians close to Soeharto tried to manipulate domestic and international opinion as they sought to preserve their own assets, even if that meant the national crisis would worsen and the poor would suffer more. Shastry gives the benefit of the doubt to many characters who turned up in Jakarta, including the currency board evangelist Steve Hanke, who offered his one-size-fits-all solution (a fixed currency rate) without realizing that the government’s excitement over his plans were not out of any belief in his economic theories, but to transfer the wealth of businesses close to Soeharto into dollarized assets at a more affordable exchange rate. (The rupiah had plummeted to nearly 17,000 to the US dollar, down from around 2,250 to the dollar before the crisis. Fixing it at 5,000 rupiah to the dollar would make such a transfer more affordable, reducing their losses.)

Shastry is also generous toward Soeharto’s controversial successor, the technologist-turned-politician BJ Habibie, who briefly thought he could complete Soeharto’s term. He doesn’t look kindly toward Habibie’s ambitions, but credits him with leaving the political scene when he realized he was no longer wanted, instead of prolonging his stay, and for setting in motion the decentralization drive that enhanced the powers of the regions and cities, loosening the control Jakarta exercised over the country without giving enough power to the provinces to fuel separatism. 
That Indonesia didn’t break up in the aftermath of the crisis is an important point. In his 1993 book, “An Empire of the East,” the British writer Norman Lewis focused on the fissures within Indonesia, writing about Sumatra (Aceh, in particular), East Timor and Irian Jaya (now known as Papua): three provinces that many analysts thought would secede at some point. East Timor did, in 1999, and rightly so. A former Portuguese colony, East Timor (today known as Timor Leste) was annexed by Indonesia in 1975, when the Portuguese left; its independence after a quarter century was inevitable. But Indonesia has defied doomsayers who felt the country would be torn asunder after Soeharto’s fall. 

Indeed, in the past two decades, the Indonesian economy has grown, its social indicators have improved and its politics has shown almost dull normalcy, with free elections and orderly transfers of power. Shastry says this is not surprising if you understand what he calls the “Indonesia Rules,” which are drawn from the country’s underappreciated strengths. It is possible, he writes, “to build a modern, democratic state from the ashes of dictatorship,” a lesson clearly lost on the Middle East. Indonesian democracy, he says, with presidential term limits, a “raucous Parliament which acts as a counter-balance to presidential power” and decentralization of power from Jakarta offers a model for large, diverse countries. 

The second rule: that it is possible to be the world’s largest Muslim-majority nation and adapt well to globalization. Shastry stresses the Indonesian brand of syncretic Islam that the academic Clifford Geertz characterized as abangan, as opposed to the more militant santri. That inclusiveness is the antidote to ancient hatreds that pit people against one another. The third rule: you don’t need hostile rhetoric to prove your leadership credentials. That resonates beyond Southeast Asia, although in the regional context, it applies to Philippine President Rodrigo Duterte more than any other neighbor. But in a world dominated by strongmen as leaders – witness Donald Trump in the United States, Recep Tayyip Erdoğan in Turkey, Vladimir Putin in Russia, Narendra Modi in India, and Viktor Orbán in Hungary – Indonesia’s quiet, gentle President Joko Widodo offers a refreshing contrast. None of the four post-Soeharto presidents (Habibie, Abdurrahman Wahid, Megawati Soekarnoputri and Susilo Bambang Yudhoyono) believed in projecting personality or power, and Jokowi, as the current president is popularly known, is no exception. And the fourth rule: Shastry says Indonesia demonstrates that modernity and tradition can peacefully coexist in a nation of 260 million, reminding the reader of the blended, interwoven traditions of Indonesia, where Islam coexists with Hinduism, Buddhism and Christianity. 
To be sure, Indonesia has extremist fundamentalism and potent Islamist forces, and Shastry’s view may seem rosy to some. Since the Bali bombing of 2002, in which 202 people died and 240 were injured, there have been eight major terrorist incidents in Indonesia, killing nearly 100 and injuring about 600 people. Indonesia still has stifling blasphemy rules, under which Jakarta’s ethnic-Chinese and Christian former governor, Basuki Tjahaja Purnama, was sentenced to two years in prison. While the prejudice against ethnic Chinese in Indonesia has diminished, it hasn’t disappeared. And yet there haven’t been any incidents of mass violence of the kind that threatened Indonesian unity in the 1960s. 

Shastry’s central premise is optimistic. Few analysts would have been surprised had the Indonesian nation-state crumbled in 1998. Not only did that not happen, the nation cohered without a strong, authoritarian leader suspending liberties. Instead, Indonesia consolidated and widened its democracy. This does not rule out the return of a strongman: Soeharto’s former son-in-law, the mercurial retired general Prabowo Subianto, who lost the 2014 presidential election, is challenging Joko again for the presidency in 2019. And yet, by proving the Cassandras wrong, Indonesia has shown that peaceful coexistence, a feel-good term that Soekarno, the country’s founding father and first president, spoke about in Indonesia’s early years, is not a mere slogan. Its quiet success needs to be known more widely because it offers a reason for hope in an international environment that seems so bleak. Indonesia, Shastry says, is “an archipelago of possibility,” and that is an achievement worthy of applause. 

Salil Tripathi is a writer based in London. He was a correspondent for magazines including the Far Eastern Economic Review in Singapore and Hong Kong between 1991 and 1999. This review first appeared in Global Asia, a journal of the East Asia Foundation, with which Strategic Review has a content-sharing agreement.

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