Indonesias New

President
What does the future hold?

July 25th 2014

Indonesia at a glance.

Population: 250 million (4th largest population in the world)

GDP: $868.3 billion
Projected growth: 5.3% (2014), 5.6% (2015)
FDI inflow: $23 billion (2013)
The biggest economy in Southeast Asia and ASEAN, accounting for
1/3rd of ASEAN GDP
Bain & Co. says by 2030 Indonesia will be worlds 9th largest
economy
Worlds 3rd largest democracy
Worlds largest Muslim majority country
Archipelago nation of 17,000 islands stretching 5,150 km
The most populous island is Java, where 141 million people or
around 60% of the population reside and the nations capital,
Jakarta, is located
Executive Presidential system and constitutional republic
Alongside the presidency, considerable powers rest with the
national parliament (DPR) and local governments after a process of
decentralization starting from 2001

CONTENTS
1. Indonesias new president
and political landscape
2. The presidential inbox: key
issues for Jokowis first 100
days
3. An introduction to our
corporate & public affairs
practice
3

Man of the people wins Indonesias Presidential Election

After an extremely close, tense and dramatic election, Joko Widodo, Jakartas
current Governor, was declared the winner of Indonesias Presidential election
by the Indonesian Election Commission (KPU) on Tuesday evening. Joko Widodo,
or Jokowi as he is popularly known in Indonesia, won 53 percent of the vote to
his rival presidential candidate Prabowo Subiantos 47 percent. President-elect
Widodo, a former furniture businessman from Solo, central Java, has risen
through the ranks of Indonesias decentralized local politics from Mayor of Solo,
to Governor of Jakarta to now President-elect of the worlds third largest
democracy; most populous Muslim country; and largest economy in Southeast
Asia.

October 1st. The new government will then have to work with the new parliament
to get legislation through, and this is where the new challenges will truly lie (as if
it has been easy by then!) Indonesian parliamentary politics is multi-party and
based on loose coalitions and compromise. This is a democratic system that
was constructed to provide checks and balances on presidential power and
prevent a return to centralized and authoritarian presidential rule. Jokowi will
have to work with the new parliament to govern in a truly effective way. Between
today and October 20th political alliances will rise and fall and it is yet possible
that we may see a completely different parliamentary coalition supporting the
new President.

This is a huge achievement for such a young democracy born after the riots and
mass protests which unseated Suhartos New Order regime in 1998, after 32
years of authoritarian rule. It is also a sign that democracy is now fully
entrenched in the Indonesian psyche and a rejection of the past. Jokowis
presidential rival, Prabowo, previously served as a top General to Suharto and
was previously married to his daughter Titiek Suharto. This election has broken
with past traditions that have favored old political elites and military generals,
and suggests that Indonesias local leaders can now rise to the very top.

On Jokowis desk when he walks into the State Palace will be a number of policy
challenges, among them regulatory uncertainty in both the mining and oil and
gas sectors, continued widespread corruption, bureaucratic inefficiency and
infrastructure bottlenecks, and an economy which has slowed over the last year.
Jokowi was also elected on a mandate that he would provide better basic
services in education and health for Indonesias poor, and tackle grinding
poverty which still affects millions across the archipelago, especially in more
rural areas. We expect healthcare to be the centerpiece of his first 100 days, but
equally he must also tackle the level of fuel subsidy which is about to break its
statutory limits (as a percentage of GDP): technically he can be impeached if
this happens, but Jokowi has already pledged to cut the subsidy in his first 100
days in office. It has been a dramatic election season, but the political drama is
only just beginning.

The election has not been without controversy. A few hours before Jokowi was
officially declared the election winner, candidate Prabowo gave a televised press
conference denouncing the Election Commission and alleging widespread voting
electoral fraud. Although not presenting evidence of this on a scale that would
likely make a significant impact, Prabowos camp now will launch an appeal to
Indonesias Constitutional Court, which will rule on the evidence and make a
final verdict - which cannot be overturned - by August 20th. Orthodox opinion is
that a ruling that overturns the KPUs decision is unlikely given President-elect
Widodos 8 million vote margin, however, this is Indonesia. The old parliament
(DPR) staggers on until September 30th and is dominated by Widodos political
enemies; they still may plan to cause all manner of issues that could disrupt the
current process as it is.
President-elect Jokowi is due to be sworn in on October 20th, a few days after
Indonesias new legislators take their seats in the Indonesian parliament on

Stephen Lock
CEO Edelman Indonesia & Head of
Public Affairs, Southeast Asia

Political uncertainty &

the Constitutional Court
The Indonesian Election Commission (KPU) declared on
July 22nd that Joko Jokowi Widodo, of the Indonesian
Democratic Party of Struggle (PDI-P) has won Indonesias
2014 presidential election, but some uncertainty still
remains as the rival candidate, Prabowo Subianto of the
Great Indonesia Movement Party (Gerindra) has now filled
for an appeal at Indonesias Constitutional Court.
The Indonesian Constitutional Court is controversial and
lacks public trust since the recent life imprisonment of the
head of the former Constitutional Court for corruption in
rulings over election disputes. The Courts final verdict
could well resemble a replay of the US presidential
election in 2000 where the Supreme Court ruled on the
next president. The Constitutional Courts verdict must be
given by August 22nd before the inauguration of the new
president on October 20th.
5

Resolving the Uncertainty: The Timeline

August 20th: Date by which Constitutional Court must rule on Prabowos lodged appeal

October 1st: The new Indonesian parliament (DPR) assembles

October: Likely announcement of key ministries just prior to accession of the new president to office, with
some horse-trading for final ministerial and vice-ministerial posts completed as DPR ruling coalitions shift
and finalize. (There is an outside chance President-elect Widodo will have a minority coalition in the DPR)

October 20th: Joint session of both parts of parliament confirm the President of the Republic of Indonesia

October 20th President-elect Widodos first five year term begins

Joko Widodo:
Indonesias 7th President
Joko Widodo has been a true outlier of the Indonesian political scene. From humble
beginnings as a successful furniture retailer, Jokowi, as he is popularly known, was the highly
successful Mayor of the relatively small city of Solo (since 2005) where he transformed a city
racked by crime and a reputation as a terrorist hotspot into a regional center for arts and
culture, which has started to attract international tourism. His campaign against corruption
earned him the description of being the most honest politician in Indonesia. Joko Widodos
victory over Jakartas incumbent governor Fauzi Bowo in 2012 was largely due to his track
record as mayor of his home town and his reputation for honesty and humility. This reputation
has carried him through to the state palace in a country where politicians are often distant
from the people in their daily dealings and frequently corrupt.
During his time in Jakarta, his hands on, street politics style of governing has won him
plaudits and great affection. Jokowi is famous for spot checks and frequent daily ground
visits to communities, government institutions and projects. This style has also been crudely
replicated by other national level politicians, keen to obtain a more populist image. During his
time governing Jakarta, his introduction of health cards (where the poor can receive free
access to basic healthcare) has been his most lasting legacy. He has also made inroads in
shaking up bureaucracy and improving Jakartas woeful public transport system, with the
introduction of upgraded and a greater number of Trans-Jakarta buses, and the start of an
ambitious MRT system.
Although in power for a short time, his national popularity has remained strong and resilient,
despite a dent in his poll ratings during a highly competitive and controversial election race.
He managed to endure attacks on his character and smear campaigns, and prove himself
capable in presidential debates, eventually winning the election with 53 percent of the vote,
despite a highly organized and well-funded Prabowo campaign.

The nation now expects change and for him to bring his can do attitude and municipal
management to the national level. He is likely to make social issues such as healthcare,
education and combating poverty the major focus of his administration. Fighting corruption
and reforming bureaucracy will also be on the agenda; Indonesians will expect to see
progress on this front, after a previous governing administration that was embroiled in
multiple corruption scandals.

A look at the new ruling party: the PDI-P

The PDI-P, one of the most successful parties in the Indonesian democratic era, is closely linked to
the political life of its chairperson Megawati Sukarnoputri, the daughter of the countrys
independence leader and first president Sukarno. Her first election to chair the Indonesian
Democratic Party in 1993 led to a split and the affix Perjuangan = struggle.

Megawati Sukarnoputri was vice president of the republic from 1999 to 2001 and (after president
Abdurrahman Wahid had to step down) president from 2001 to 2004.
The party has a functioning infrastructure with branches all over the country but with strongholds and
higher election results in Java and Bali.
After 10 years in opposition, Megawatis PDI-P is now in power with Joko Widodo as the President of
Indonesia. Megawati will still wield considerable influence behind the scenes and will remain as a key
political power broker. She also may act as a gatekeeper to Indonesias new president. A key issue when
Jokowi takes office will be how independently he can act and if Megawati is really willing to take a back
seat.
Aeran Ismail
Director, Corporate and Public
Affairs

An overview of Indonesias new

political landscape

In terms of the outlook of a Jokowi government and the likely

implications for business, some nationalist and protectionist policies will
remain in place, but many analysts predict that Jokowi will continue to
govern in a moderate and open style.
Jokowi, while still being nationalistic by western standards, is viewed as
more open in his economic approach. It is telling, for example, that the
Indonesian stock market shot up when the majority of quick count
polls after the July 9th election stated that Jokowi had won and again
with the declaration of his victory by the Electoral Commission (KPU) on
July 22nd.
Beyond this, Indonesias political landscape is further complicated by a
geography that spans over 17,000 islands and decentralized democracy
across 34 provinces and 510 districts, with district and provincial
leaders elected directly at the local level and entrusted with the power
and responsibility to provide the majority of services to their electorates.
They also have a number of local legal powers which can complicate the
regulatory process. Many businesses entering Indonesia for the first
time find it hard to navigate Indonesias complex system of
decentralised governance and confusing, and often contradictory,
regulations. Building alliances and engaging with relevant stakeholders
in the new government will be vital for business success.
9

The new Indonesian parliament

(DPR)

Of the total 560 seats in the House of Representatives, PDI-P secured 109
seats. PDI-P are backed by Hanura, NasDem and PKB, while for the time
being the opposition are made up of Golkar, Gerindra, PPP, PKS, PAN and
Demokrat.
Indonesias next government will not be dominated by a strong majority,
instead it will be a government of multiple coalitions once more. This means
that a Jokowi administration, will be much more constrained in pushing new
policies and reforms through the DPR and getting stuff done. He will have to
compromise and make deals with other parties. The new parliament will be
challenging for the new administration to work with. This also makes radical
or large-scale reforms much more unlikely.

Opposition parties to the biggest party, PDI-P, also recently passed a revision
to the law on legislative assemblies (UU MD3) which means that the PDI-P
(although the largest of the parliamentary parties) will not automatically
obtain the powerful and important speaker post, as has been the norm in
previous governments. This just goes to show the fractious future that the
new parliament will face. This said, we have seen signs that current
coalitions are likely to realign and evolve once Jokowi takes the reigns of
power.
The expectations that a Jokowi government can push through new reforms
and shake-up Indonesias political process maybe optimistic. Politics and
policy making will very much be the art of the possible.
10
Source: Jakarta Globe

Economic Reforms
Construct sea toll roads
Irrigation dams
Promote industrial development
for plantation owners and
midsize businesses

Infrastructure

JOKOWIS
CAMPAIGN
PROMISES

Reevaluate FTAs
Manage food imports
A revision of oil and gas laws
Restrict outsourcing in state-owned
enterprises
Streamline business licenses
Mining operations to benefit local
communities

Create 10 million new jobs

Promote Creative and
Digital industries

Limit foreign banks share in

Indonesia and instead promote
the principle of reciprocity
Special banks for farmers and
SMEs

Policy

Distribution of agricultural lands (9

million hectares) for 4.5 million
families
Development and improvement of
irrigation on 3 million hectares of
rice fields
Construction of 25 dams and 1
million hectares of new agricultural
land outside of Java
Provide clean water to farmers
homes with subsidies
Regeneration of 1,000 villages

Agriculture

Utilize renewable energy-based

technologies
Improve oil and gas infrastructure
Achieve national energy security
Transfer of fuel to gas
Cut the energy subsidy

Energy Sustainability

Jobs

Accessibility

Improve professionalism in
the public sector
Raise salaries and improve
welfare of civil servants,
military, and police
Provide universal access to
education with an
Indonesia Smart Card
Provide free health services
with an Indonesia Health
Card

Reform public service

through empowerment of
villages and sub-districts
Reform law enforcement
agencies
Utilize IT for public
transparency
Establish a National
Integrity System

Anti-corruption

11

Industry and business outlook

Based on the general sentiments of the investor community,

analysts deem Jokowi to be market-friendly, earning a
reputation as a hands-on leader and problem solver.

While his party has a nationalist agenda, analysts predict that

Indonesias need for foreign investment to maintain and
accelerate growth will mean that there will be no drastic
changes towards greater nationalism. Hence the election
rhetoric on nationalism is likely to exceed actual policy action.

As an example, Taiwans Foxconn Technology Group, the

worlds largest electronics contract manufacturer and one of
the major suppliers to Apple Inc., has made it clear that its
chairman is in favor of dealing with Jokowi to bring the
companys giant investment to Indonesia.

The market and investors are therefore optimistic for the

future

12

The presidential inbox: key issues for Jokowis

first 100 days

13

Three major issues for business poor infrastructure, rampant

corruption and an uncertain legal and regulatory environment
Infrastructure

Corruption

Regulatory & legal uncertainty

Indonesian logistics costs are amongst the most

expensive in the world. It is 4-5 times more expensive
to ship a container within Indonesia from Jakarta to
West Sumatra (a shorter distance) than it is from
Jakarta to Singapore. This gives an idea of the scale
of the problem. The problem is not just confined to
roads and ports, however, but other critical areas.
Indonesias top five international airports, which
include Jakartas Soekarno-Hatta, are all under
immense strain and have been operating at over
100% capacity for some years. A full 15 million
households have no access to electricity. The
Indonesian Chamber of Commerce (KADIN) states
that logistics costs in Indonesia have already reached
over 24 percent of total GDP, compared to neighboring
Malaysia in which costs are around 15 percent.
Globally, Indonesia currently ranks 53 on The World
Banks Logistics Performance Index, significantly
behind regional neighbors Thailand, Malaysia and
Vietnam. All this points to a desperate need for
progress to be made.

In 2013, Transparency International ranked Indonesia

114 based on corruption perception by both domestic
and foreign observers. Despite the unfavorable
ranking, Indonesia is one of the few countries in the
Corruption Perceptions Index that shows a steady and
marked improvement, moving 4 places up from a
118th ranking in 2012. The work of Indonesias
Corruption Eradication Commission (KPK) has also had
a number of high level successes, including
successfully prosecuting leaders in the current ruling
party and government institutions. Indonesia's free
press has also been fearless in investigating and
raising corruption allegations in the public domain.
However, the cost of corruption in Indonesia from
2001-2009 was Rp 73.1 trillion (about US$7.86
billion). Recently, the Indonesian Corruption Watch
reported that Indonesia lost as much as Rp 7.4 trillion
(US$632 million) alone to corruption in 2013 this is
probably a very conservative figure.

Indonesias investment climate continues to be

plagued by regulatory and legal uncertainty.
Government requirements often compel foreign
companies to do business with local partners and to
purchase goods and services locally. As of 2013,
Indonesias Investment Law restricted foreign
investment and increased foreign equity limitations
in
sectors
such
as
telecommunications,
pharmaceuticals, film and creative industries,
construction, horticulture-related businesses, and
distribution and logistics. Over the past several
years, the Indonesian government has introduced
regulatory changes to increase government control in
the energy and mining sectors. The regulatory
changes have raised costs for foreign businesses
and questions about the sanctity of contracts already
in force with the Indonesian government. The
ongoing process of transferring investment-related
decisions from central to provincial and district
governments has helped reduce some burdensome
bureaucratic procedures, but also led to
inconsistencies between national, regional and local
laws.

The World Bank

Logistics Performance Index 2014
Indonesia is currently 53 in the word

Transparency International
Corruption Perceptions Index 2013
Indonesia ranks 114 globally

The World Bank

Doing Business 2014
Indonesia ranks 120 globally

Issues for industry:

A brief summary
Investment: As Indonesia pursues the objective of selfsufficiency, Indonesia has intensified domestic
discussions of a revised Negative investment List.
Industry and business complaints that need to be
addressed include investment uncertainty, with the
recent cancelling of all bilateral trade treaties and the
bungled mineral ore export ban, which has worried
foreign investors. There is still positive interest in
Indonesia as an investment destination though; Ernst
and Young plan on investing $61 billion in Indonesia
over the next 3-5 years, granted the investment
environment is conducive and welcoming.
Mining: The industry is concerned with the imposition of
a ban on mineral ore shipments, designed to force
miners to build smelters and processing plants.

Oil and gas: Government Regulation 79, signed in

December 2010, allows the Indonesian government to
change the terms of certain existing production sharing
contracts, while eliminating the tax deductibility of
certain expenses, change the terms and criteria for cost
recovery, and place limits on allowable costs for goods,
services, and salaries. The oil and gas industry is
looking for more collaboration and certainty from the
next government.
Pharmaceuticals:
Indonesia
requires
foreign
pharmaceutical companies to manufacture locally or to
entrust another company that is already registered as a
manufacturer in Indonesia to obtain drug approvals on
its behalf. It also contains a technology transfer
requirement. How the new government will approach
these issues. remains unknown

Foreign ownership:
Foreign ownership of banks is capped at 40
percent.
Foreign ownership of telecommunication
providers is capped at 65 percent for suppliers of
value-added and mobile telecommunications
services and 49 percent for suppliers of fixed
network services.
Labor issues: The low productivity of the workforce
amid demand for higher wages has increased
tensions in manufacturing based industries. The
minimum wage has increased by 30 percent from
2010 to 2013, the highest in the region, compared
to Thailands 14.2 percent, China 8.4 percent,
Vietnam 6.7 percent and Malaysia 3.3 percent.
Indonesias labor productivity on the other hand
only grew by 2.8 percent per year from 1980 to
2012, while Thailand grew by 3.6 percent.

15

Uncertainty facing the mining

industry
The mining sector is of vital importance to Indonesia, employing millions of people
across the country, especially in less developed remote areas and makes a
significant contribution to the countrys GDP and import/export balance sheet,
however, it has faced a torrid time of late since the imposition of a mineral ore
export ban and a prohibitively high export tax in January, designed to encourage
miners in Indonesia to build smelters and refine minerals in country. This has led to
a halt in production and the cessation of shipments. The law though is widely
perceived to have had a detrimental effect and in fact caused miners to rethink
investments and the commercial viability of current production. Thousands of jobs
have already been cut or are in limbo; predicted state losses amount to $4 billion
per year and have put pressure on the rupiah; and rural regional areas have seen
investment dry up and construction projects grind to a halt, hurting local economies
and regional development.
A key question now is how a Jokowi administration will approach the issue and the
sector in general. There are signs that a change in approach is afoot. Jokowi has
announced that he wants to sit down with the mining companies and other
stakeholders to resolve the problem and put an end to the dispute in order to get the
sector going again. Jokowi has articulated a more conciliatory and collaborative
approach to the industry, stating that he would sit down with all players - industry
stakeholders and regulators - to find a solution. Jokowis comments have been
interpreted as a sign that he will reconsider the ban on unprocessed ore exports and
make it easier for firms to build smelters. Economic advisers to Jokowi have also
criticized the policies of the current administration towards the industry and for
creating the conditions that the sector finds itself in today, reiterating a need for
open exports and government support to create a more conducive conditions for
production and value added investment.
Whether Jokowi can find a middle ground between creating a more positive
environment for foreign mining firms whilst still appeasing those who tend towards
resource nationalism remains to be seen.
16

Revisions to the oil and gas law

Indonesias oil and gas sector is another vital area for the countrys
economy, contributing around 8% of Indonesia's GDP and over
28% of national revenues or an average of $35 billion annually.
One of the big needs from the industry will be for the new Jokowi
government to address the current oil and gas law and give more
certainty to investors. The sector currently has ongoing concerns
over contract sanctity, legal and regulatory risks, corruption, land
taxation, cost recovery and renewal of existing production sharing
contracts.
Indonesia needs $20.1 billion in annual investment or $201
billion over the next 10 years to maximize existing and future
production opportunities, an investment level difficult to maintain
without a conducive regulatory environment and strong
government backing that addresses industry concerns and gives
investors certainty over long term, multimillion dollar investments
in exploration and technology. In recent years, the industry has
seen year-over-year production declines with increased costs to
explore essential new technologies needed to maximize existing
projects and bring online new high-risk projects in outlying areas
lacking in infrastructure. A more supportive regulatory environment
from a Jokowi government will therefore be a key ask and
expectation for the sector.

17

Cutting the fuel subsidy

Indonesias rapidly growing middle class are fuel thirsty, with millions of new cars and
motorcycles coming onto the road each year. This is currently supported by an unsustainable
untargeted energy subsidy which mainly benefits richer Indonesians and is estimated to cost the
government $33 billion in 2014 around 15% of the state budget (more than infrastructure,
health and education spending). It is also the main reason for a growing current account deficit
predicted to be 2.8% of GDP this year. Gone are the 1980s were Indonesia was a leading oil
exporter, today it imports oil at an increasing cost. These factors and the heavy burden on the
state budget have led Jokowi and his Vice President, Jusuf Kalla, to declare that the new
administration will cut fuel subsidies in their first 100 days of office.
Cutting the fuel subsidy is not only vital for Indonesia to balance the books, it is also a statutory
requirement. Currently the law caps the state budget deficit at 3% of GDP, so with the increasing
cost of the subsidy and more and more fuel consumption, plus the threat of global oil price rises
and rupiah depreciation, the next government will have to cut the subsidy. Alternative options
include cutting spending in other areas, which is equally difficult considering Jokowi has pledged
to increase spending on social issues and improve healthcare and education provision. It would
also be detrimental to Indonesias overall development and an equally difficult proposition to sell
to the electorate.
The next administration will have to approach the fuel subsidy cut with care, as it was increases in
fuel prices that helped fuel the economic volatility that eventually unseated Suharto and the New
Order regime in 1998. When current President Susilo Bambang Yudhoyonos administration cut
the fuel subsidy last year, there was also widespread protests. It is a political hot potato, but a
necessity supported by all reputable economists and analysts.
Jokowi has pledged that he will gradually reduce the fuel subsidy over a four to five-year period.
Kalla has also said that it would be an economic priority for the new government once they take
office in October. Having Kalla as his Vice President will benefit Jokowi, as Kalla is an experienced
policy maker and understands the sensitivities involved from when he also served as Vice
President to current President Susilo Bambang Yudhoyono during his first 5 year term in office.
Indonesias energy supplies are still fuelled by oil, gas and coal, and the current government and
the next administration will face the major policy challenge of increasing energy supply to keep
up with demand energy consumption is expected to rise by almost 30% by 2020. Support for
fossil fuel burning power stations, especially coal, is still strong; the outlook for other energy
sources, such as geothermal and renewables looks less certain.
18

Image: basibanget

ASEAN &
the ASEAN Community 2015
ASEAN and the upcoming ASEAN Community 2015 will present an
enormous opportunity but also an enormous challenge for Jokowi and
his administration. It is also of note that the success of ASEAN is
intrinsically linked to Indonesias willingness to lead and participate.
ASEAN is a political and economic organization made up of 10
Southeast Asian countries, but Indonesia is critical to its influence and
relevance, as the biggest country, biggest economy and biggest
population in ASEAN. How far Indonesia is prepared to work with the
group really does set the pace for ASEAN integration and its future.
Jokowi has been generally favorable in his public statements to the
ASEAN Economic Community, stating that Indonesian companies must
compete to gain a bigger regional and international market share. He
said the best way for Indonesia to compete in ASEAN and take
advantage of the opportunity was for the government to support
enterprise and protect local business by further empowerment through
expediting licensing procedures and administrative processes so that
Indonesian businesses would be better placed to compete. However,
Jokowi will be acutely aware of the sensitivities and concerns that
Indonesian businesses (especially Small and Medium Sized Enterprises
which employ the majority of the population) have over allowing foreign
companies greater market access to do business and sell goods. It is
unlikely that he would change track in any fundamental way from the
way the Indonesian government currently engages with ASEAN; some
protectionist measures will remain in place especially in sensitive
national industries, such as banking and finance.

We know as well from the Edelman Trust Barometer 2014 results for
Indonesia that only 1 in 20 Indonesians want their government to focus
on creating free and open markets (thats much lower than the global
average). Opening up markets further still is unlikely to be a particularly
popular policy, although a middle ground maybe found. It is also worth
noting that even if politicians speak in nationalistic tongues at home, the
regional and global reality means further ASEAN integration and
connectivity is set to continue. ASEAN political and business leaders will
be looking to see how Jokowi addresses the issue and the choices he
makes in the months ahead.

19

Making universal healthcare a

reality
Jokowi has recognized that Indonesia faces two major problems: education and health. As part of
his strategy and campaign promise, Jokowi has reaffirmed his commitment to provide free
universal health care and education for all residents. Dubbed the Indonesia Health Card, i.e. Kartu
Indonesia Sehat or KIS for short, it aims to provide greater access to medical checkups and
treatment for underprivileged residents. Free healthcare may also lesson the negative political
impact that will come with his promised cut in the fuel subsidy, which will inevitably cause some
friction.
On the issue of the health card, many skeptics have argued that KIS would conflict and overlap with
the current Social Security Agency system, i.e. Badan Penyelenggara Jaminan Sosial or BPJS for
short. In fact, Jokowi states that KIS would strengthen and refine the programs of BPJS, in which he
explains that KIS is merely an extension of BPJS. With the BPJS card, it is region-determined based
cover depending on where the card was issued. The KIS program will utilize the e-KTPs (national
identification card) database to ensure true national cover. The government will bear the cost for
the wellbeing of Indonesias poorest citizens. The cards will guarantee Indonesian citizens receive
health care, regardless of economic status. If implemented effectively and in full this could well be
transformative for Indonesia on par with the introduction of truly universal healthcare at the point
of delivery and the birth of the NHS in the UK.

20

Improving education
Jokowi has promised to implement free universal education up to 12 years old and put an
end to parents worries that their children cannot receive basic education due to financial
constraints. Similar to KIS, the Indonesia Smart Card, i.e. Kartu Indonesia Pintar or KIP, aims
to provide universal education for all citizens, including farmers, fishermen, laborers, and
people with disabilities.

In order to improve Indonesias overall human resource quality, Jokowi also aims to also
launch the Indonesia Smart Card, i.e. Kartu Indonesia Pintar, or KIS. (The only difference
between the KIP and School Operational Assistance, i.e. Bantuan Operasional Sekolah or
BOS is that KIS uses a card system which makes it clear who receives free education.)
Jokowis love of the smart card is based on his success as Governor of Jakarta and his
introduction of similar cards for health and education access, which proved to be highly
effective and popular.
Jokowi has also pledged to provide scholarships for students to continue higher education
who currently cannot afford this due to financial constraints, yet score highly in academic
tests. Health and education are likely to be central areas of focus for the next administration
and are where some of their most ambitious pledges have been made.

21

An introduction to our
Corporate & Public Affairs
practice

Our Corporate and Public

Affairs practice in Indonesia
Edelman Indonesia offers a full suite of corporate PR and public affairs expertise

The Edelman CPA Practice

30+
Corporate
Reputation
& Strategy

dedicated professionals including former journalists, policy and

industry specialists, crisis and issues counsellors, lobbyists and
market entry communications experts
CSR &
Sustainability

B2B
Communications

Community &
Employee
Engagement

Government
Engagement &
Public Affairs

Crisis & Issues

Management

23

Core public affairs services to understand

Indonesias new government

- Stakeholder mapping

- Government relations and

engagement

- Issues, policy analysis and

briefings

- Coalition building and campaigns

- Policy monitoring

- Corporate reputation and public

visibility

- Risk assessments

- Crisis and issues management

24

A selection of our clients

25

Our Senior Team

Stephen Lock
CEO Edelman Indonesia
& Head of Public Affairs,
Southeast Asia

Stephen has almost two decades of international experience in public affairs including
risk and stakeholder mapping; engagement; legislative lobbying and government
relations. Having lived in emerging markets for over a decade, before joining Edelman in
South East Asia, he was Managing Director, Eurasia and Global Co-head of Public Affairs
for the worlds other large independent PR firms. He has lived and worked in the UK,
Brussels, Italy, the Caribbean, Russia and Turkey, before moving to Indonesia. He travels
widely on client government and stakeholder management projects across South East
Asia. His sector expertise includes oil and gas; banking; disease awareness and
education; and pharma market access and pricing. In several countries he has led teams
on competition, intellectual property and privacy issues and handled projects around
foreign direct investment.
He has co-drafted legislation and advised on national parliamentary enquiries and EU
investigations. He has responded to political-driven media and consumer crises with
programs integrating government relations, PR, social media and stakeholder outreach.
He has managed and co-authored research ranging from retirement income funding;
carbon emissions trading; the economic impact of Hepatitis C; smoking cessation;
consumer goods pricing and financial regulatory reform. He writes, trains and lectures
regularly. Stephen graduated in Law from Cambridge University and 1995-1997 advised
the UKs Labour party on business relations for the 1997 General Election. He started his
career as an investment banker at Lazards and has professional accountancy and
London Stock Exchange qualifications.

Bambang has over 18 years of experience in public relations, strategic

communications, organization development and executive training. For more than eight
years with Edelman, he has provided communication and media counsel to CEOs and
management teams from many corporations in various industries, including the public
service sectors.
In addition to his work experience in public relations consultancy covering such key
areas as Crisis/Incident Management, Employee Engagement and Social Engagement,
Bambang gained extensive experience in stakeholder management and public relations
when he worked as senior corporate affairs managers with Caltex (currently known as
Chevron Pacific Indonesia), Coca-Cola Bottling Indonesia, and BHP Billiton.

Bambang Chriswanto
Vice Chairman and Head of
Consulting

In his current position, Bambang provides communications and strategic counsel for all
practice groups of Edelman Group of companies in Indonesia across many industry
sectors. He is also the program director and one of the lead trainers in media
skills/spokesperson development programmes, behavior change communications, and
crisis management.
Bambang holds a bachelors degree in English linguistics from IKIP Malang in Indonesia
and later attended graduate studies in communications management from the
University of Indonesia. Bambang has an MBA degree in Strategic Management from
Prasetiya Mulya Business School, one of the leading business schools in Indonesia

28

Jacob Drake
Head of Corporate and Public
Affairs

Jake Drake brings to the firm more than 20 years of strategic communications
experience in corporate brand and reputation management, social responsibility and
crisis and issues management In Indonesia Jake has led communications initiatives
involving a wide range of issues critical to the global reputation and continued economic
development of Indonesia and its leading companies. That includes work on social,
environmental, fair trade, and economic development issues in partnership with the
Indonesian Ministry of Trade and Ministry of Forestry, the U.S. consulates, Indonesian
chambers of commerce, and business support associations in Australia, North America
and across the EU, as well as private companies such as NALCO, the U.S.-based leader in
clean water technology, and Singapore-based Carbon Conservation, an environmental
consulting group promoting worldwide investment in REDD and REDD+ programs in
Indonesia.
Jake has worked in a wide range of industries, including pulp and paper, forestry, oil and
gas, energy services, commercial real estate, professional and financial services, health
care, transportation, telecom, consumer and enterprise technology, mobility, and new
media/entertainment.
In Asia he led regional communications strategy, CSR and social media campaigns for
Sinar Mas Forestry and Asia Pulp & Paper, Dell, ExxonMobil, Paul Capital and Bacardi
Brands as well as country-specific initiatives for Merck, Pfizer, Pepsi Co., Unilever, Hilton,
the Womens Tennis Association and Sony Pictures Home Entertainment. Other past
clients include Shell Oil, Starbucks, Sony Pictures, Sony Ericsson WTA Tour, Pioneer
Electronics, RadioShack, Mattel, Sony Ericsson, THQ, Paramount, Fox, Genentech,
Medtronic, British Airways, Del Webb, Pulte Homes, Lucent Technologies and Illinova
Energy Partners.

Aeran is a Singaporean that has been based in Indonesia for the last 12 years.
Holder of an undergraduate degree in Network Computing from Monash University,
Australia, he specializes in Crisis Communications and in the Lobbying of Regulatory
Affairs in the Technology practice, and he is also fluent in brand and social media
engagement. Aeran has been involved in conducting training for C-Suite executives
and Senior Managers on Media Communications, Crisis & Issues Management and
Change Management.

Arwan Shah Bin Ismail

(Aeran)
Corporate and Public Affairs
Director

His career began 11 years ago as a Technology and New Media Project Consultant
for Hill and Knowlton in Melbourne where he worked for 3 years, before moving on to
Microsoft Vendor (Raffles Consultancy) where he took on the role of Sales/Public
Affairs Director in 2004.
During his tenure with Microsoft, Aeran helped the company in integrated digital
communication strategies and drove strategic online marketing campaigns to
engage consumers. He also spent a good amount of time training senior government
officials on I.T. Infrastructures, Evolution of Technology and Technology Divide,
Intellectual Property and Data Centers to create awareness amongst legislators on
the importance of the need for governments to be at the forefront of technology.
Aeran has represented Microsoft (Indonesia and APAC) both in the U.S. and in the
Asia Pacific region for their Educational and Innovation programs and the
implementation of them with various ASEAN Educational bodies. Aeran has also
successfully overseen executive training and counseled representatives from Acer
and INTEL Indonesia.

CONTACT
Stephen Lock,
CEO Edelman Indonesia
& Head of Public Affairs, Southeast Asia
Email: Stephen.Lock@edelman.com
Phone: +62 21 721 59000