Indonesia

Playing politics in Indonesia

James Nason, 10/06/2014

Indonesia will elect a new president early next month, a process with potentially important ramifications for the future of Australian beef and cattle exports to the market.

Two candidates have emerged from the recent general elections to vie for the opportunity to replace retiring Susilo Bambang Yudhyono as Indonesia’s next president.

Former furniture exporter turned Jakarta Governor Joko Widodo is currently the frontrunner to win the July 9 elections, according to Indonesian media reports, while his rival, retired army general Prabowo Subianto, is also in contention to win office.

Where both stand on the issue of protecting local industry versus accepting more agricultural imports is a key issue of interest for all Australian export industries that deal with Indonesia, including beef.

Nationalistic sentiment runs strong in Indonesian politics on any given day and can escalate to fever pitch during an election campaign, all but guaranteeing that both candidates will make strong statements about protecting local industry and restricting imports as the campaign intensifies over its final month.

As any voter knows, what a candidate says during a campaign and what they do once in office can be two different things.

Political ideals are one thing, market reality is another.

As has been witnessed in recent years, political ideals are one thing, but market reality is another.

An obvious example was the Indonesian Government’s desire to pursue a policy of self-sufficiency in beef production from 2010 to 2014.

Under the policy the Indonesian Government imposed increasingly restrictive limitations on beef and cattle imports each year, and offered incentives for local producers to breed more cattle, in the belief that the policy would lead to increased domestic beef production.

Such policies play well in Indonesian politics, where more than 30pc of voters are directly employed in the agricultural sector.

However the cutbacks to imports were so severe that they quickly caused a massive shortage of beef, which forced beef prices beyond the reach of many consumers and encouraged cattle farmers to sell breeding stock for slaughter to capitalise on the high prices, and in fact moved Indonesia further away from its goal of achieving self-sufficiency in beef production.

In October last year, with beef prices soaring at record highs, the Indonesian Government was forced to abandon the self-sufficiency policy and re-open its gates to high-volume imports in order to improve supplies and bring prices back to lower and more affordable levels for consumers.

As the 2014 presidential election process now enters its final month, media attention is focusing more heavily on where both presidential candidates and the coalition of parties they each represent stand on the import issue.

The messages from both are predictably mixed.

Front-runner Joko Widowo was Governor of Jakarta in the final years of the beef self-sufficiency push and supported the need  to increase beef imports to ease the price of beef for his constituents.

But now as a presidential candidate he is also clearly looking to tap the protectionist mood within Indonesia by stating that he wants the country to phase out agricultural imports.

Over the weekend media reports have also focused on comments by his rival Prabowo that he will ease restrictions on Australian beef imports if he wins office.

A spokesman for Prabowo told a journalists forum in Jakarta on Friday that in order to feed Indonesia’s growing population of 250 million people, extra imports of Australian beef may be necessary.

While some reports have interpreted these comments to suggest Probowo is pro-imports, he has also shown strong signs of support for protecting local industry from imports.

For example the former general is reportedly raising his own herd of cattle these days in order to ‘woo’ Indonesia’s farmers, and has made promises to boost funding tenfold for agriculture and to cut dependence on food imports in order to foster “Indonesian nationalism.”

Prabowo also said in a recent campaign speech that he didn’t want to see “Indonesians being slaves to foreigners”.

As a number of Australians close to Indonesia’s political process explained to Beef Central on a recent visit to Indonesia, statements that are made in the hyped up, highly-nationalistic atmosphere of Indonesian election process should not be interpreted as definitive policies guaranteed to be adopted as legislation once a candidate takes office.

Only when the election is run and won and a new president is installed will Australia’s export industry have a clearer picture of what lies ahead.

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