It's improving, but there's a long way to go. Yesterday's release of the Australian Strategic Policy Institute's report Seeing Indonesia as a Normal Country is timely, coming 10 years after the overthrow of the Suharto regime and just ahead of Kevin Rudd's visit to Jakarta next month.
By mapping the progress made over the past decade, the authors lay to rest some of the alarmist reporting about Indonesia as a breeding ground for Islamic fundamentalism and a nation struggling to control multiple separatist movements. But the title of the report is misleading. Though Indonesia is in no danger of becoming a failed state, it doesn't serve anyone's policy objectives to pretend that Indonesia should be seen as "normal" – whatever "normal" means in the context of international relations.
Indonesia has made remarkable progress towards becoming a more open, democratic and economically advanced society. The stifling uniformity of Suharto's New Order has gone, but the same old elite still controls many levers of political and economic power. As the report acknowledges, Indonesia suffers from "globally chart-topping levels of corruption".
Judicial reform has been "often piecemeal and highly uneven". Bowing to political pressure, courts often fail to uphold convictions of senior officials. Human rights violators often go unpunished. Rampant corruption, the weak application of the rule of law and regulatory uncertainty have been deterrents to foreign direct investment. Though inflows have picked up, Southeast Asia's largest economy attracted only $US10.3 billion in FDI last year. By comparison, China approved $US35billion in FDI in the first four months of this year.
Half of Indonesia's population lives on less than $US2 a day, with as many Indonesians living in poverty as the rest of East Asia put together, excluding China. In a country of more than 220 million people the number of taxpayers stands at a paltry 3.3 million. Despite forecasts of economic growth reaching 7 per cent this year, Indonesia still lags well behind the other tiger economies of Asia such as Vietnam, China and India. Unemployment hovers around 10 per cent. Government spending on health and education relative to GDP is lower than in most other Asian countries.
The debate over whether Indonesia should be seen as a normal country masks more important policy issues for Australia. Our shared concerns for maintaining security and promoting economic prosperity require Australia to maintain a close and constructive relationship with all levels of the Indonesian Government. The Rudd Government's foreign policy priorities, particularly the new emphasis being given to China at the expense of our traditional allies such as Japan and India, have yet to be fully understood in the region. Engaging with Indonesia requires appreciating its complexities, sensitivities and vulnerabilities. Pretending things are normal risks misreading the inner workings of our most important neighbour.