Political tensions mount for Indonesia's Widodo as economy skids

Political tensions mount for Indonesia's Widodo as economy skids
Indonesian President Joko Widodo.

JAKARTA - When Indonesian President Joko Widodo summoned his economy ministers to the palace last week to discuss growth slumping to its lowest level since 2009, they weren't the only ones to show up.

Dozens of senior figures from Widodo's political party arrived to make their views heard after data showed Southeast Asia's largest economy is smaller, in real terms, than when he took office in October.

"We're here to convey to the government that budget disbursement has been slow because ministers have not done their jobs," said party official Olly Dondokambey, after he and colleagues swept through the palace gates in a showy motorcade.

Widodo has vowed to lift economic growth to 7 per cent on average over his five-year term, but critics and even some of his own advisers say the economy has actually gone into reverse because of incompetent ministers and bungling bureaucrats.

Slow progress boosting growth and sniping from within Widodo's party have left the former furniture salesman, who many people hoped would be able to spur a quick economic recovery, increasingly isolated.

"There is too much bad, bad policymaking that's happening right now," said one senior executive at multinational company in Jakarta. "It's a combination of people trying to learn on the job and not getting stuff done."

SLOW SPENDING

A slump in commodity prices has added to the economic headwinds for the resource-rich economy.

Widodo did move quickly when global oil prices plunged by scrapping petrol subsidies and freeing up some $20 billion to spend on ports, roads and railways.

But the country's slow-moving bureaucracy has struggled to spend the cash, and many infrastructure projects, pivotal to boosting investment, are tied up in red tape. As of April 25, the government had spent only 7 trillion rupiah (S$714.6 million), or 2 per cent, of its 290 trillion rupiah budget for infrastructure spending.

Slow government spending was partly behind the slide in gross domestic product growth to 4.7 per cent in the first quarter of this year.

Purbaya Yudhi Sadewa, the president's deputy chief of staff, says palace officials know the economy is slowing but feel they are being let down by a cabinet heavy on politicians and short on experienced technocrats.

"The president has led the way, he has cleared up here and there himself, rather than the government. So I hope that the ministers will follow. If I were the president, I'd command them to," he said.

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