Comparing SBY and Jokowi: Economic Growth and Policy Strategies in Indonesia

When comparing the economic growth of Indonesia during the presidencies of Susilo Bambang Yudhoyono (SBY) and Joko Widodo (Jokowi), several factors come into play. SBY's era, from 2004 to 2014, coincided with a global resource boom. Despite the World Bank spokesperson's caution, Indonesia's economic prognosis during this period seemed promising, largely due to commodity prices. However, Jokowi's tenure has faced challenges, particularly as the resource boom tapered off and new policy factors emerged.

SBY's Economic Context

Susilo Bambang Yudhoyono (SBY) became president during a unique period in the global economy, when resource prices were peaking. From 2004 to 2014, Indonesia experienced significant economic growth, partly because the country was endowed with substantial natural resources. This period was often described as an 'automatic' growth phase, a term that suggests limited economic policy innovations but high reliance on natural resource wealth.

The Resource Boom

The resource boom contributed significantly to Indonesia's economic health during SBY's tenure. When Jokowi took over in 2014, the boom had ended, and the effects of the economic slowdown were already felt. SBY's economic policies benefited from favorable external economic conditions, particularly in terms of high global commodity prices, which had a positive impact on the country's export-driven economy.

Jokowi's Economic Challenges

Compared to SBY, Jokowi's presidency faced a more challenging economic landscape. The end of the resource boom meant that Indonesia had to find new sources of economic growth. Additionally, Jokowi aimed to spur economic activity through rapid debt financing and infrastructure projects. However, this approach has been criticized for inadequately considering the country's capacity to manage such rapid investments.

Critical Infrastructure Projects

Under Jokowi's leadership, there was a push for numerous infrastructure projects, including the issuance of large amounts of debt. Critics argue that such projects were initiated too expeditiously without thorough planning, leading to potential long-term financial burdens. Moreover, Indonesia's state-owned enterprises (BUMNs) did not fare well, particularly those involved in electricity distribution, such as PLN, Pertamina, and Garuda. These enterprises were poorly managed and financially constrained, yet they were tasked with taking over assets previously managed by foreign companies, who had contributed to the national treasury.

Economic Luck and Political Factors

Susilo Bambang Yudhoyono's economic success was not solely due to his policies but was also influenced by external factors. Indonesia started from a relatively low economic base and had just emerged from the turbulent post-reformasi era, characterized by political instability. The economy during the reformasi period was in shambles, and the government had to address the immediate needs of the population, such as fuel subsidies, which had significant implications for the economy's vulnerability to external factors.

Political Stability and Economic Policy

The political stability that SBY enjoyed was crucial for economic policy implementation. In contrast, Jokowi's presidency saw the economy grappling with the aftermath of the resource boom's end, along with other domestic economic challenges such as the rise of e-commerce and its impact on traditional retailers, particularly those in rural areas.

Conclusion

In summary, the economic growth during SBY's presidency can be attributed to a combination of favorable global conditions and the country's natural resource endowment. In contrast, Jokowi's economic approach was more inward-looking and focused on rapid infrastructure development, despite concerns about its feasibility and potential risks. Jokowi's economic policy was not as effective in the post-boom era, highlighting the importance of political stability for sustained economic growth.

Key Takeaways

Economic growth under SBY was due to external factors such as the resource boom and political stability. Jokowi's policies lacked the necessary foresight to manage rapid debt financing and infrastructure projects effectively. The political stability during SBY's era was a critical factor in his economic success.

Understanding these factors is crucial for evaluating the economic strategies of both presidents and their impact on Indonesia's long-term development.