Distracted by bikinis

Hardline Indonesians took to the streets to protest against the Miss World contest, but there are more pressing issues than exposed skin

PUBLISHED : Saturday, 21 September, 2013, 12:00am
UPDATED : Saturday, 21 September, 2013, 2:29am

Indonesians are taking to the streets to demand the government heed their complaints. Are they livid about corruption? No. Fed up with poverty? Not really. Angry over political gridlock? Not so much. It's those damn bikinis.

In recent days, the nation with the world's largest Muslim population has been consumed by protests against the Miss World pageant finale next Saturday, originally scheduled to be held near Jakarta. Muslim groups have threatened violent attacks. The government has moved the event to Bali - the Hindu-majority island popular with Westerners - and increased security.

This column is not a defence of beauty contests. My question is, why the misplaced anger? Where is the outrage over obscene levels of graft, which eats up national wealth and forces 115 million Indonesians to live on less than US$2 a day? Where are the placards condemning policies that have made the rupiah Asia's most pathetic currency? Why don't we hear chants for accountability from leaders?

It's great that Indonesians are worked up, but their ire would be more constructive if it were focused on the right target. And investors know the trouble.

The risk of Southeast Asia's biggest economy going into free fall, as it did in 1997, is small. Its banks are much healthier. The government is far more transparent, and the central bank is sitting on US$93 billion of currency reserves. That is more than twice the size of the International Monetary Fund-led bailout Indonesia received 16 years ago. Also, short-term foreign-currency debt levels are manageable.

Where’s the outrage over obscene levels of graft, which eats up national wealth?

The political stability that President Susilo Bambang Yudhoyono has established since 2004 has won investment-grade ratings from Fitch Ratings and Moody's Investors Service.

Foreign-direct investment trends, meanwhile, show that Indonesia's domestic market is still wooing considerable long-term money. The total rose 18.9 per cent from a year earlier in the second quarter to US$6 billion. Although that is the slowest pace since 2010, it's still suggestive of a nation that, for all its warts, has a bright future.

Long-term investors remain enthusiastic about Indonesia's vast store of natural resources and the fact that 26 per cent of its 250 million people are younger than 15. Yet short-term investors are focusing ever more intently on those warts, which Yudhoyono's government must urgently address. The immediate worry is a trade deficit that widened to a record US$2.3 billion in July, weighing on a current account that's been in shortfall for seven quarters. That's prompting waves of hot money to flee and creating a sense of crisis.

The bigger problem is the government's failure to use the good times to accelerate infrastructure upgrades and institutional reforms. Inadequate ports, highways, refineries and power grids are squandering Indonesia's chances of attracting manufacturing jobs that are now going to China, the Philippines and Vietnam. The government has been remiss about making Jakarta's bureaucracy more efficient, building more credible judicial and tax systems, rolling back unaffordable subsidies and scrapping limits on mining exports.

Corruption remains rampant. Early on, Yudhoyono scored some victories over graft. But the campaign lost focus and urgency. Indonesia slipped 18 places in Transparency International's Corruption Perceptions Index last year. Yudhoyono can't run in next year's election. What if his successor cares more about enriching cronies?

The Miss World controversy raises another concern: the democratically elected leader of a secular government caving to a minority of Muslims. One of Yudhoyono's most important tasks is to hold the forces of creeping Islamisation at bay. Last year, radicals forced Lady Gaga to scrap a sold-out concert in Jakarta.

The past few months have shown how fickle markets can be about Indonesia and how vital it is for the government to head off negative sentiment before it overwhelms the economy. Yudhoyono must use his last 10 months in office to cement the sweeping changes that made Indonesia an investment darling.

He must hasten plans to spend US$125 billion on infrastructure by 2025. He should empower an independent anti-corruption ministry with full subpoena powers. The country needs a blueprint and timeline for strengthening democratic institutions. The former general must insulate the government further from military influence, and contain extremism.

Indonesians need to do their part, too. Their voices can keep Yudhoyono focused on the real obscenity. It's not beauty contests or pop stars but a vast kleptocracy that thrives off the masses being distracted by small stuff. The more voters obsess about exposed skin, the less the fraudulent class worry about being exposed. That's the real travesty, not Miss World's bikini.