Jokowi, Rini and Sri Mulyani

In the first months of President Joko “Jokowi” Widodo\'s administration, I wrote in this daily that his economic policies and views (“Jokowinomics”) will structurally push for an expansive fiscal policy.

Today, in an interpretative context, I have found the basic answer: Compared to previous presidents’ policies, Jokowinomics portrayed a dramatic shift in the politics of culture itself. The inclusion of the phrase “starting development from the periphery” in his campaign promise in 2013 clearly reflects this view.

How should we see this “dramatic shift”? Despite having been born and raised in one of the centers of the Javanese culture, namely Surakarta, Jokowi has never seen Indonesia from the perspective of his hometown. On the contrary, he seemingly sees Java from the perspective of Indonesia. Without any precedent, for instance, Jokowi prefers to celebrate Idul Fitri at the end of the Islamic fasting month in Aceh and West Sumatra and visit a Christmas celebration in Papua. Huge celebrations that had conventionally been celebrated by previous presidents at the State Palace in Jakarta have now moved to other places. Symbolically, under Jokowi, the palace has become mobile, going to places even outside Java.

In the speculations of historical imagination, Jokowi’s pan-Indonesian political choices do not only erode Java’s position as the center, but also mark the end of the concept of petanen in the traditional political cosmology. Through her 1997 work, Java and Modern Europe: Ambiguous Encounters, historian Ann Kumar described petanen as “the heart of the palace”, reflecting the strong ideological link between the palace and agriculture.

As a petanen, the abode of Javanese traditional kingdoms literally means a “farmer’s palace” that houses the rice deity and her consort. Consequently, the cooking of rice is seen as one of the holiest kingly rituals.

Perhaps previous presidents realized for sure that Indonesia was not only about Java. This is debatable, but I believe that the concept of petanen influenced their subconscious on the issues of politics and development strategy. The concept of petanen makes way for a development belief that is not only concentrated in Java but also heavily based on the concept of the “landed”.

A collective memory ingrained in our traditional mindset perceives land as the source of economic empowerment and wealth. In other words, existing concepts of development reflected land-based ideological and political views.

Unsurprisingly, then, the concept of an archipelagic state never found its optimum form of realization prior to Jokowi’s presidency. American historians John G. Butcher and RE Elson in their 2017 book, Sovereignty and the Sea: How Indonesia Became an Archipelagic State, stated that Indonesia did not have any sovereignty over its marine regions until the mid-1950s.

Consequently, Indonesia, they wrote, “was made up of hundreds of pieces of territory separated from one another by high seas”. It was only in 1982, after the Djuanda Declaration on Dec. 13, 1957, and the issuance of the 1960 law by the Djuanda Cabinet, that Indonesia gained an international recognition of its waters. After that, based on the UN Convention on the Law of the Sea, Indonesia officially became an archipelagic state.

However, as mentioned previously, this term “archipelagic state” is merely an official name. During the New Order, when the state was highly powerful politically, economically and, most importantly, militarily, anarchy occurred in border regions. This indicated that, in reality, the principle of the archipelagic state was not upheld as state power was not penetrative. Non-state authority, as Michael Eilenberg wrote in 2012 in At the Edges of States: Dynamics of State Formation in the Indonesian Borderlands, was more recognized than official laws.

The strength of non-state authority, he continued, clearly showed the weak presence of the state, especially in an era when regional autonomy expanded.

Therefore, conceptually, Jokowi’s strategy of development from the periphery can be interpreted as a dramatic change of the culture of politics in Indonesia. His priority of infrastructure development outside Java, especially in borderlands, reflects this shift of awareness in implementing concrete steps towards strengthening the existence of the archipelagic state.

Rini and Sri Mulyani: Fiscal and SOE strengths

The dramatic shift in political perspective and the desire to realize an archipelagic state through infrastructure development in regions outside Java encourages an expansive fiscal policy. No matter how you want to see it, infrastructure development in peripheral regions in an archipelagic state as huge as Indonesia requires an unprecedented massive amount of funding. An expeditious fiscal policy becomes a determining factor.

This is all related to a well-planned state budget. In his writing, “Critical Point of the 2015 State Budget” (Kompas, 2/10/2014), Mudradjad Kuncoro provided several technical explanations regarding the planning of a state budget, including on revenue clusters. What I wish to bring up here is how to anticipate the amount of state revenues next year, assuming that there will be no changes to the structure of taxation. Where will our taxes be directed and what will the consequences be for regions and groups with different economic abilities?

On this question, Finance Minister Sri Mulyani Indrawati has given a concrete answer. Even though it did not reach its maximum potential, the tax amnesty that she oversaw for the past nine months has shown real results. In his opinion article, “After the Tax Amnesty” (Kompas, 5/4/2017), Yustinus Prastowo said that Rp 4.866 quadrillion (US$366.3 billion) stored domestically and abroad had been declared by taxpayers up to March 31, 2017. Furthermore, fund repatriation commitments reached Rp 147 trillion.

Even if the realization for fund repatriation and redemption money only achieved 15 percent and 82 percent of their respective intended targets, the wealth declaration surpassed its target of Rp 4 quadrillion. Most importantly to be emphasized here is that, using these facts, tax expert Prastowo said that this program was not only successful, but had given a clearer picture of sources of tax revenues than ever before.

However, most importantly here is regarding the expenditure cluster in the state budget, as Mudradjad explained. The question is: What programs will be funded by the state (and regional) budgets to fulfill certain targets? The question is clearly about “budget politics”, namely the actions to allocate portions of a budget to achieve political targets – in this case, concrete steps for strengthening the archipelagic state, which has become the foundation of Jokowi’s political awareness. Here, Sri Mulyani’s role is crucial. Amid the state’s limited fiscal capability, can she accomplish this “historic and political” task in a meaningful way?

On this question, I am reminded of Sri Mulyani’s optimism for the Indonesian economy amid recent global economic and geopolitical shifts. Apart from highlighting the strong domestic consumption and improving trade balances, Sri Mulyani stated, as quoted by The Jakarta Post (24/3/2017): “Increasing capital expenditure among state-owned companies” is the reason for her optimism over Indonesia’s economy.

Here we see the crucial role of State-Owned Enterprises Minister Rini Mariani Soemarno in reinforcing Jokowi’s vision of an archipelagic state. Under Rini, the accumulated energy of all state-owned enterprises (SOE) has turned into a “quasi-SOE”. I quote this phrase from Rini’s own words in a seminar on SOEs held by Kompas daily: State-owned enterprises are another side of the state budget. In other words, state-owned enterprises are not mere corporations, but are also agents of development. In order to realize this goal, Rini emphasizes cross-SOE synergy and a capital accumulation that is productive and efficient with the establishment of cross-sector parent companies for state-owned enterprises.

By declaring the SOEs as “agents of developments”, Rini encourages them not only to invest in strategic sectors like infrastructure that the private sector often neglects, but also to push down inflation. An example is Pertamina’s “one price policy” for fuel products, especially in Papua. Technically and economically, this action stabilizes prices in “peripheral regions” as high fuel prices tend to trigger inflation. However, politically, we can see Rini’s action as a way to reinforce an archipelagic state in Indonesia.

As a “quasi-SOE”, the process to establish cross-sector parent SOEs will theoretically give way to two important things. First, the availability of an integrated domestic fund to significantly push national economic performance. Second, as a cumulative effect, the creation of a parent SOE will create leverage, namely an ability to provide access to an exponential amount of financial resources compared to scattered state corporations.

Political pillars of an archipelagic state

Therefore, Jokowi’s shift in political culture as reflected in his Jokowinomics is all about steps to reinforce the concept of the archipelagic state of Indonesia. It’s a much broader step than a simple development paradigm shift of “land-based” to “sea-based”. The emphasis is focused on “building Indonesia” as a whole, comprising various islands over a huge area. Imperceptibly, through the distribution of state authority, this massive political undertaking depends on the prowess of two Indonesian women: State-Owned Enterprises Minister Rini Mariani Soemarno and Finance Minister Sri Mulyani Indrawati.

Therefore, although this may seem to be hyperbolic, these two women serve as the main pillars in a historic undertaking of securing the political success of the concept of the archipelagic state of Indonesia in its truest meaning.

Celebrating the work that has been, is being and will be done by Rini and Sri Mulyani is our way to commemorate the month of Raden Ajeng Kartini from a unique perspective.

FACHRY ALI

Co-Founder, Institute of the Study for the Advancement of Business Ethics (LSPEU) Indonesia