Bill Guerin, Jakarta – Though there has been no singularly mind-boggling achievement in his first year in office, Susilo Bambang Yudhoyono's bold decision to slash fuel subsidies not once, but twice, puts him in a different class to any of the three Indonesian presidents since Suharto.

While the International Monetary Fund described the move to cut fuel subsidies a second time as "wise and courageous", the painful adjustment has angered many Indonesians who complain the subsequent 126% hikes in fuel prices were too high and will increase their suffering.

The cutting of fuel subsidies was just one of numerous hot issues the president faced in his first year in office.

During the past year Yudhoyono has had to deal with the massive December 26 tsunami – the country's worst natural disaster – a series of deadly earthquakes, soaring global oil prices, outbreaks of avian flu, polio and dengue fever, and, just for good measure, triple suicide bombings in Bali that killed 26, including the three bombers, and injured more than 100.

Meanwhile, there has been progress, as well as setbacks, on the three main issues he pledged to deal with when elected – the economy, corruption and security.

The international community's perception of Indonesia is dogged by past human-rights abuses, but Yudhoyono, a retired general, is widely seen abroad as a capable and committed leader who has raised his country's image and has a genuine wish to increase investment, fight terrorism and curb corruption. Yet, his popularity on the home front is affected by perceived slow progress on the same three issues.

Yudhoyono, who became the country's sixth president on October 20, 2004, won 61% of the 141 million votes cast in the election – a world record for the single largest number of votes in a direct presidential election. His approval ratings have been consistently higher than his predecessors. After he was elected polls showed he had a huge approval rating of 80%, but this month, for the first time since he took office, his popularity dropped below 60%. Indonesian Survey Circle says its latest poll in October shows only 52.4% of Indonesians were satisfied with his performance, down from 64.7% in August.

The economy, business and investment

Economic growth last year stood at 5.1% while this year's target is 5.5%. Outside help is vital to spur growth, create more jobs and alleviate poverty; but two landmark cases that could set back foreign investment to dangerous lows have yet to be resolved.

Disputes with Cemex and Newmont were said to be a high priority for Yudhoyono, who said they'd be resolved amicably by April at the latest. The government wants to reach an out-of-court settlement over a US$133 million civil suit the Environment Ministry filed against Newmont Mining, a multinational that is the world's largest gold producer, over alleged pollution. Mexico's Cemex, the world's third-largest cement-maker, has been battling the government for four years over its thwarted efforts to take over state-run Semen Gresik, the country's largest cement producer, in which Cemex bought a 25.5% stake with an option to buy majority control. The proposed purchase was blocked by local Gresik units and politicians opposed to foreign ownership.

Meanwhile, Minister of Trade Mari Pangestu is hard at work with other economic ministries and chambers of commerce to finalize a new investment law that could result in a vastly improved climate for business. The volatility of the rupiah is also a major cause for concern. After hitting three-year lows it has settled at a little more than 10,000 to the dollar, long considered a major psychological barrier. Inflation is approaching 9%, and interest rates are rising fast.

Corruption

Indonesia is slated as one of the world's most corrupt countries but Yudhoyono's anti-graft campaign, aimed also at increasing foreign trade and investment is drawing blood. The former governor of Aceh province, Abdullah Puteh, has been prosecuted, convicted and jailed for corruption. The former minister of religion, Said Agil Hussein Al Munawwar, is on trial for a graft scandal over funds for the annual hajj pilgrimage to Mecca. Literally scores of regional government officials and legislators are awaiting trial on graft charges.

Security

Yudhoyono has prompted his law-enforcement agencies to work closely with their international counterparts and share intelligence, particularly in the Southeast Asia region, where several agreements have been signed to counter terrorism.

The president's decision to give the green light to the military to reactivate the territorial-command structure (dispersing troops all over the archipelago) has worried rights groups who fear a return to repression. Yet, Indonesia, with more than 17,000 islands and home to the world's fourth-largest population, is an almost perfect lair for extremist groups that operate in conditions of free movement and inconspicuousness. An arrest last week serves to illustrate the challenges. With police and the military on high alert and warnings of more attacks being planned, police arrested four people attempting to smuggle 350 kilograms of explosive ammonium nitrate, 900 Indian-made instantaneous electric detonators and more than 1,000 meters of heavy 1.5-centimeter-thick fuse wire from Malaysia into Indonesia. Mixed with diesel and high-explosive TNT, ammonium nitrate makes a powerful bomb that has been used in previous terrorist attacks in Indonesia

Three women from Central Sulawesi, where Christian-Muslim sectarian violence cost hundreds of lives in recent years, and a man from the West Java town of Sukabumi – where the Australian Embassy bombers came from – were captured on a speedboat heading for Sulawesi.

Jemaah Islamiah masterminds, Azahari Hussin and Noordin Mohammed Top – both Malaysians – remain at large. Activists have urged action to stop radical Islamic groups from encouraging intolerance against each other's faiths and taking the law into their own hands to attack those with different beliefs. They argue that by failing to combat such radicalism, the government is unlikely to be able to prevent terrorist attacks

Second year

Yudhoyono's next 12 months in office could be every bit as challenging. Although steady progress can be expected from a clearly committed president, he will need to battle to overcome the legacy of poor governance he inherited. His prime task will be to build on the confidence and trust he has engendered so far and implement policies that bring in greater investment and development, ensure better law enforcement and address the inequitable distribution of wealth. Almost 50% of Indonesians live on less than $2.50 a day.

Short-term public expectations of more jobs and a reduction in poverty have not been met. Fifteen million jobs are needed to curb unemployment, which remains about 9%.

As well, an imminent crisis over avian flu is a matter of grave concern. The Minister of Health has warned that the country faces an epidemic unless it can contain the outbreaks. Chairul A Nidom, the microbiologist who first identified the virus in Indonesia's birds, slammed the government response to the virus claiming that if it had acted sooner there would have been no outbreak. "They have wasted so much time. What terrifies me is that it just won't affect Indonesia."

Yudhoyono told a World Bank forum in Helsinki via teleconference: "The pandemic will be worse than the tsunami disaster, which killed hundreds of thousands of people but stopped after a few minutes. In a pandemic, the virus will spread in minutes and will kill more people in vast areas. It will be our worst nightmare."

Aceh

Yudhoyono's response to the tsunami disaster won accolades. Despite concerted pressure from several generals and from nationalist legislators, he approved the entry of thousands of foreign soldiers and aid workers into the province. The international community pledged billions of dollars in aid but bureaucratic infighting slowed the reconstruction of the shattered province, which is still proceeding at a snail's pace.

However the president seized the momentum to resume peace talks with the separatist Free Aceh Movement in February. After five rounds of talks the Free Aceh Movement (GAM) and the government carved out a deal and signed a peace agreement in Helsinki on August 15, ending a conflict that had claimed more than 15,000 lives (mostly civilian). The accord resolved core issues of demilitarization, local governance and the future of GAM members.

Superpowers

The president visited the US in May and oversaw the signing of several memorandums of understanding (MoUs) and agreements. An interagency working group for judicial issues is under way and trade and investment talks have resumed.

In July he postponed an official visit to China to manage the domestic fuel crisis, but MoUs promising a total of $7 billion in Chinese investment were signed when he made the trip to Beijing three weeks later.

Friends and neighbors

Indonesia's relations with its southern neighbor, Australia, strengthened rapidly under Yudhoyono's leadership and diplomacy. Australian Prime Minister John Howard praised him for having "great goodwill towards Australia".

Imron Cotan, the Indonesian ambassador to Australia, was sacked by the president for angering Canberra with a series of decidedly undiplomatic and callous comments on the highly politicized case of Schapelle Corby, a young Australian woman who was convicted of smuggling 4.2 kilograms of marijuana into Indonesia.

A serious dispute with Indonesia's northern neighbor, Malaysia, was avoided after the president used his diplomatic skills to cool tempers. In February, Malaysia's state oil company, Petronas, granted Shell Corporation a concession to explore oil reserves in the disputed waters of the Ambalat block off northwest Kalimantan. Indonesia responded by dispatching four warships. Frequent street rallies saw Malaysian flags burned amid calls to "devour Malaysia".

Changed face of parliament

There are no fewer than 14 parties in the 550-seat House of Representatives but Golkar and the Indonesian Democratic Party of Struggle dominate it. Yudhoyono's own Democrat Party holds only 57 seats. Following the inauguration of legislators, house factions were involved in a conflict over the elections of house leaders and heads of the powerful parliamentary commissions. The government also faced intense scrutiny from the legislature on major policy decisions. As a result, during the first year of its five-year term, the house endorsed only 10 proposed legislation drafts.

Tommi Legowo, director of the Indonesian Parliament Watchdog Society (Formappi), points out that the house's legislative function "clearly does not work, with only 10 of 55 targeted bills having been endorsed".

Nonetheless, since Vice President Yusuf Kalla was elected Golkar leader in December, government-sponsored polices may face less opposition in the house. But first a ministerial reshuffle is on the cards. Rumors are gathering apace in Jakarta that two members of Yudhoyono's "United Indonesia Cabinet" – Defense Minister Juwono Sudarsono and Finance Minister Jusuf Anwar – have requested permission to resign.

The consensus among local media is that the president has indeed made a difference, and there is hope of better things to come. But Yudhoyono is often said to be indecisive and not ready to take risks.

Yet, even a skeptical media would be hard-pressed to dismiss the message in Yudhoyono's latest appeal to his people. He said that in facing tough challenges,the Indonesian nation and people should not easily give in to "complaints, frustration, loss of confidence and mutual-condemnation". He called on the entire nation to remain optimistic about the future.

"The hardships we are facing this year must not make us hopeless or lose our fighting spirit to meet the future," he said.

[Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 20 years as a journalist. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.]