INDONESIA: ‘We will develop faster than people might think’
Thomas Cromwell

30 April 2007

In the last decade or two Indonesia has looked like a country headed for ever more problems. With 245 million people (88 percent of them Muslims) and 360 ethnic groups living on a wide-flung archipelago of 17,500 islands, with separatist movements seeking independence and Islamists agitating for a theocratic state, some have wondered if any central government could ever manage to keep the country together and peaceful.

Adding to its troubles, in the late 90s Indonesia was hit hard by the Asian economic meltdown. Its currency, the Rupiah, went into a tailspin and investors pulled out. Then, after East Timor became a separate state, the long-running separatist struggle in Aceh heated up; in 2002 over 200 people, mainly foreign tourists, were killed at a resort area in Bali by a bomb set off by an affiliate of Al Qaeda; and in 2004 a Tsunami killed 168,000 Indonesians. 

But with the election of President Susilo Bambang Yudhoyono in October 2004, Indonesia seems to have stabilized, and is now on a path of steady growth. 

Indonesia’s ambassador to Washington, Sudjadnan Parnohadiningrat, recently sat down with to discuss the situation in his country, and explain what has been happening in the last couple of years.

He noted that the key to understanding his country, “is the resilience of our people and government.” He said that “despite problems, we will survive and develop faster than people might think.”

He noted that presidential elections in 2004 were peaceful, and considered free and fair. With this mandate, the president has managed to steer Indonesia into calmer waters.

The results can be seen in economic growth figures. In 1999, at the height of the Asian crisis, Indonesia’s GDP shrank by 13 percent. In 2004 it grew by 4.5 percent, in 2005 by 5 percent and in 2006 by 5.6 percent. This trend is expected to continue, with GDP growth for 2007 estimated at 6.5 percent.

This growth has been driven in large measure by increased exports, which grew from $90 billion in 2005 to $100 billion in 2006.

At the same time, the political system now embraces Indonesia’s many constituencies more effectively. “People have their voices heard by the government,” explained the ambassador. “We believe we will have a stable political situation with democracy flourishing. We are confident we are moving in the right direction.”

One of the important steps taken by the current government was the lifting of subsidies for oil consumption last year. The subsidies had consumed “a huge amount” of government funds, money that can now be spent on infrastructure projects that will help the economy grow, and spur investment. In 2007 and 2008 the government is moving aggressively to build roads and ports and extend electrification.

At the same time, the program to combat corruption has raised confidence in the government and improved the investment climate.

However, to date most foreign investment has been in the form of portfolio purchases rather than foreign direct investment, which the government is most keen on securing, including for the major infrastructure projects it is now focused on.

Energy generation is another major area seeking foreign investment. To date, most power has been generated by gas-burning plants, but the government also plans one nuclear plant and several plants that will burn coal.

In the meantime, there are several projects to boost gas production. Chevron is developing gas resources in Sumatra, ExxonMobil is doing the same in Natuna, and there is the large Tangguh field in Irian Jaya being developed by a consortium led by BP.

In 2008 Indonesia will send its first shipments of LNG to America, via the Baha terminal in Mexico.

Ambassador Parnohadiningrat pointed out that although economic growth has been encouraging, “We have to be aware of the challenges.” Indonesia needs to expand its economy by about 7 percent a year to absorb the 12 million young people who enter the job market every year, he said.

Asked about the threat of more Islamist violence, the ambassador said: “We are very optimistic.” There are several forces within society that work to limit extremism, he said.

First among these is tradition. “In a multi-ethnic society, our people are used to upholding traditions and values inherited from their ancestors.”

And people are generally attracted to moderate positions, rather than fundamentalism. This is best demonstrated by the success of two very large Muslim associations: Nahdatul Islam, headed by former president Abdul Rahman Wahid (Gus Dur), with 40 million members, and Muhammadiyah, with 35 million members. Both groups are moderate and pro-democracy.

Then there are an additional 75 million Muslims who are “rather secular,” according to the ambassador. They believe that “religion is a personal matter that should not be bound by the state or a single belief.”

The ambassador stressed that, “The vast majority of Muslims renounce radicalism and the use of violence to promote Islam.” They are “against the use of force in spreading Islam.”

There are also communities of Christians (about 20 million, including many ethnic Chinese), Hindus and others.

The ambassador also noted that Aceh, where conflict continued from 1976 to 2005, is more than a local success. He believes the solution worked out there, which gives greater control over local resources to the local government, is a model for other potential separatist trouble spots in Indonesia.

“Aceh is a model of how we managed to secure peace in a long conflict situation,” he said. “In one year, conflict turned to a peaceful situation.”

Part of the Aceh solution was to allow the use of Islamic law, sharia, to be applied to family matters, alongside the secular laws of the state which apply to commercial and criminal matters.
Turning to relations with Washington, the ambassador commented on their significant improvement in recent times. In the past, US concerns centered on the lack of democracy and human rights in Indonesia. Now there is substantial cooperation on several fronts, including mutual security and military ties. He said both military-to-military and police-to-police relations are “developing very well,” especially in the fight against terrorism.

“We believe the United States and Indonesia have a common objective for a peaceful, tolerant and democratic society,” the ambassador concluded.

Biography of Ambassador Sudjadnan Parnohadiningrat

Ambassador Sudjadnan Parnohadiningrat has had a distinguished career in Indonesia Foreign Service. He has been with the Department of Foreign Affairs of the Republic of Indonesia since 1981. Prior to his assignment as Ambassador to the United States, he was Secretary General of the Department of Foreign Affairs, 2002-2005. In this position he managed the administrative operation of the Department with 1600 national staff, more or less 1700 diplomats who work at the headquarter and overseas posts, and 3000 locally engaged staff abroad including the running of 119 overseas posts.

During his tenure as Secretary General, he was also assigned as the Senior Official Meeting (SOM) Co-Leader for the 2005 Asia Africa Summit took place in Jakarta, Indonesia. Concurrently he was the Secretary of the National Committee for this Summit, attended by 47 Head of States/Governments and 50 Ministers from the Asian-African countries. He was the Indonesian SOM Leader for ASEAN in 2004-2005. In 2004 he was elected as the Chairman of the Third Preparatory Committee Meeting for the 2005 Review Conference of the Non Proliferation Treaty (NPT) and in 2005 he chaired the Main Committee I of the 2005 NPT Review Conference.

He was Ambassador to Australia and Vanuatu, from 2001 to 2002 and Director for International Organizations, Department of Foreign Affairs, 1999-2001. In this position he oversaw the operation of the Indonesian Permanent Mission in New York, Geneva, Vienna and other Indonesian multilateral posts. In 1999, he was assigned as Secretary of the Task Force for the Implementation of the East Timor Referendum.

He was the Minister Counselor at the Indonesian Permanent Mission in New York in 1996-1998 when he was elected as Vice Chairman of the First Committee of the 1998 United Nations General Assembly (UNGA). During his assignment in New York he was also elected as the Chairman of Working Group on SSOD IV of the 1997 UNDC and elected at the same position during 1998 UNDC session. During his tenure in New York he was the Coordinator of NAM Working Group on Disarmament.

 He was assigned as First Secretary at the Indonesian Permanent Mission in Geneva in 1989-1992 covering the Conference on Disarmament (CD). In 1990 he was the facilitator of the negotiation on the Old and Abandoned Chemical Weapons at the CD Chemical Weapons Convention Negotiation. In 1984-1986 he was assigned as the Third Secretary/Second Secretary at the Indonesian Permanent Mission in Vienna covering the IAEA. In 1982-1984 he was the Third Secretary of The Permanent Mission of Indonesia covering the CD in Geneva.

He received his degree in International Relations from Gajah Mada University, Yogyakarta, Indonesia and attended a Master Program at the School of International and Public Affairs at Columbia University in New York, USA. He is now completing his Doctoral degree in Diplomatic Study at the Asia Pacific College of Diplomacy of the Australian National University, Canberra, Australia.

He is married to Nunung Kuncorowati and has three adult children and one grandchild.