beyondbrics

Indonesian President Susilo Bambang Yudhoyono appears to be auditioning for a part in a domestic version of the film Groundhog Day, when the same events occur over and over again.

In his annual state of the nation-cum-budget address on Monday the retired general said: “The time has come for us to no longer be a caged tiger but a nation that is competitive on the international stage.”

Yudhoyono explained that he would do his bit to end the big cat’s incarceration by increasing government spending on infrastructure by 28 per cent next year, introducing legislation to streamline land acquisition procedures for infrastructure projects and tackling the nation’s endemic corruption and antiquated bureaucracy.

It is easy to see why the president is so keen to implement such reforms. Ratings agencies have Indonesia a whisker below investment grade – Fitch has Indonesia at BB+ for example – and the government is desperate to join the emerging nations big league.

Southeast Asia’s largest economy is certainly making progress towards its economic holy grail. Growth in the second quarter was 6.2 per cent, higher than expected, and Yudhoyono predicted it would continue to rise to 7.7 per cent by 2014.

All this sounds great, except that the world has heard it all before. Several times. Ever since he won his first election in 2004 Yudhoyono has said Indonesia was failing to fulfil its potential and that infrastructure – particularly land reform, corruption and red tape were the key areas that need to be addressed.

Is anything different this time around? Not really. Infrastructure spending is a fraction of what is promised each year and by some measures, such as power cuts in the capital Jakarta, the nation’s infrastructure is deteriorating. The war on graft, meanwhile, is making progress but inter-agency disputes that the president refuses to spend political capital to resolve are preventing significant gains. And as for bureaucratic reform, there are a few “islands of excellence” within the ocean of mediocrity that is the Indonesian civil service but powerful vested interests continue to stymie efforts to link them together.

So next year the tiger might become an orangutan – or one of Indonesia’s other famous symbols – and the figures will be slightly different. But the production will still almost certainly be Groundhog Day.

Related reading:
Indonesia GDP growth reaches two-year high, FT
Asia: More self-contained, FT