Susilo Bambang Yudhoyono followed plenty of orders as a career Army officer, but his willingness to speak truth to power took him to the top of the political ladder. Yudhoyono’s disputes with former presidents Abdurrahman Wahid and Megawati Sukarnoputri led to his being forced out of or resigning ministerial posts but earned him a reputation for integrity. He defeated Megawati for the presidency in 2004 by promising to combat corruption, and after presiding over a robust recovery, he won reelection last July. Yudhoyono, 59, spoke recently with Institutional Investor’s Asia Bureau Chief Allen T. Cheng.
Institutional Investor: Can you talk about your achievements in your first term and what you would like to accomplish next?
Yudhoyono: Indonesia’s achievements are reflected in its macroeconomic stability and political stability. After the crisis ten years ago, Indonesia’s economy is now back on track. Last year the country grew at around 4.5 percent. Unemployment was reduced from around 10 percent to around 8 percent, and poverty levels dropped from 17 percent to around 14 percent. Our prudent fiscal management has brought Indonesia’s debt-to-GDP ratio from 83 percent in 2001 to around 29 percent in 2009. The success of our political transition is unquestionable. Last year, for the third time in a row, Indonesia successfully carried out a peaceful and democratic parliamentary and presidential election. It has also successfully continued to carry out the largest decentralization efforts ever known, transferring much of the responsibility from the central to the local government. From a country with its democracy in trouble in 1997, Indonesia has now turned into a regional role model.
With my renewed mandate, we are targeting economic growth to around 7 percent in the next five years. I will focus on achieving a consolidated democracy, where freedom and rule of law coexist. In order to achieve these targets, institutional reforms to ensure good governance would be key. We need strong institutions, public and private, to deliver our development objectives.
Indonesia still suffers in the eyes of global investors, many of whom believe the country has not rid itself of crony capitalism and corruption. How are you addressing these problems?
Part of the reason why I ran for president is to fight corruption, because it was really rampant in my country and threatening our future. I oblige all my ministers to sign an integrity pact, and I hold them accountable to it. I also make a point of keeping the top layer of my administration clean, because I know once the top is tainted, credibility will disappear and the system will crumble again. I have also prohibited my family from entering into business. My elder son is in the military, and my younger son is a parliamentarian.
Our campaign is indiscriminate. No one is spared or above the law: Ministers, governors, regents, mayors, politicians, parliamentarians, judges, police, generals, bankers, businessmen — they all have been investigated and tried.
It remains an uphill battle. Reforms and changes in large scale always take time. Indonesia has been suffering from a gap between misperception and reality, but I am sure this will change over time. If we keep this up, I am convinced, in 15 years — within this generation — we can make corruption the exception rather than the rule.
Can you talk about the allegations from the opposition about the Bank Century scandal? What are you doing to address their concerns?
Differences in views are a normal part of democracy, and there should be room for that. I believe the voice of the opposition can also serve as an important check on government.
In terms of [Bank Century], it is actually not a big scandal. A decision was taken by some of my cabinet members — and at a time when quick action was necessary, they acted fast. It has been proven that their actions have saved Indonesia from a banking and economic crisis, unlike in 1998. Not only that, their actions have enabled Indonesia to have one of the strongest growth rates last year, after China and India. The quick action has minimized the impact that the global crisis may have on the country. I am certain that their decision was the right one and that it was done in a transparent manner.
How is Indonesia differentiating itself from neighboring nations, which also offer attractive investment opportunities?
Indonesia is making it easier for investors to come and do business here. We have implemented a one-stop service to obtain licenses and nonlicensing services, as well as an electronically automated process to bypass many of the face-to-face contacts that were required to start a business.
Indonesia has opened up many of the sectors that had been restrictive or closed to foreign investors. We are actively seeking foreign direct investment as a key pillar of our development strategy. Matchmaking investors with local partners, provision of fiscal and nonfiscal incentives and better investment aftercare are a few of the services in which Indonesia is seeking to surpass its neighbors.
What are your goals as one of the Group of 20 leaders?
I would like to see the G-20 embrace further the voice of the developing economies in its agenda, to ensure a real sustainable and balanced growth is achieved. Indonesia, alongside China and India, had shown the resilience of its economy in the midst of the global crisis, and there is much that the developed countries could learn from this experience. Going forward, the G-20 has to take on the development agenda to better serve the larger global audience.
