Published in ISEAS Perspectives, 18 August, 2015.

EXECUTIVE SUMMARY

• After the initial fracas over Cabinet appointments and the tensions between the police and the Corruption Eradication Commission (KPK), President Widodo launched a programme of speaking at the commissioning ceremonies of major infrastructure projects. Achieving economic growth driven by infrastructure projects has become his key policy focus for the moment. It is also his key political project.

• This prioritisation of infrastructure projects is a continuation, repackaged, of Yudhoyono’s Masterplan for the Acceleration and Expansion of Indonesia’s Economic Development (MPE3I) but boosted with a major increase in government funding for infrastructure.

• President Widodo has been able to secure unanimous parliamentary support for this economic prioritisation and the concomitant changes in budget.

• The increase in government funding for infrastructure has been enabled by the ending of fuel price subsidies, the imposition of new government charges and the mobilisation of funds associated with insurance and health programs. Most of these decisions are reducing the disposable income of the lower middle class and lower income strata.

•  The Red-White Coalition (KMP) opposition is concentrating criticism on minor issues aimed at generating uncertainty about the capabilities of the Widodo government while making sure it is not seen as an obstacle to any of the infrastructure plans, and is most likely waiting for failure in this area.

• The gap between Widodo’s infrastructure prioritisation and a range of other service agendas which surfaced during the 2014 election campaigns is providing the context for various initiatives to start up new parties appealing to those agendas. This gap may be partly ameliorated in the coming year if there is concrete and palpable implementation of health and education reforms making these services more.

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