Indonesia's current democratic practices, which have taken root in the past 20 years following the demise of the New Order’s authoritarian regime, remain the best hope for the country to be able to have an inclusive and sustainable economic growth, a panel of experts concluded in a discussion held on July 28.

Speaking during a seminar organised to celebrate the 50th anniversary of the Jakarta-based Centre for Strategic and International Studies (CSIS), economists and political analysts agreed that despite setbacks and shortcomings, in the past 20 years public participation in politics, both through regular elections and the exercise of free speech, has resulted in a government that is more responsive to demands for economic improvement.

CSIS visiting fellow Puspa Delima Amri, who is an assistant professor of economics at Sonoma State University argued that democracy at the local level as well as decentralisation, one of the hallmarks of Reformasi, had led to improvements in public services and had also been conducive to economic growth, which benefits a large section of the population.

“Democracy not only benefits the upper classes of society,” said Puspa.

Puspa quoted World Bank data showing a marked improvement in public service delivery in Indonesia’s local regions. The proportion of workers accessing health care rose from 53 per cent in 1996 to 92 per cent in 2016.

The country also saw an improvement in the net enrolment rate in senior high school from 34 per cent in 1996 to 61 per cent in 2016.

Puspa credited the success to the post-New Order decentralisation programme, which allowed local leaders to have a competition in the delivery of good policy

“People could demand accountability and vote out leaders who didn’t perform,” said Puspa.

In fact, the significant improvement continued to be felt by a large section of the public despite the rise of dynastic politics, political patronage and vote buying, which were rampant in local elections, Puspa argued.

Furthermore, democracy also offers an avenue where people can express political dissatisfaction and demand accountability.

“Aside from creating a society that is more open and transparent, these features support economic growth that is stable and inclusive,” Puspa said.

Mandiri Institute head Teguh Yudo Wicaksono said that although democracy, due to its natural tendency for accommodating many interests in society, delivered economic growth at a slower pace, once it took off it could offer a more sustainable path to prosperity.

“Once we entered a transition [into democracy and institutional reform], we experienced a fairly slow growth,” Yudo said, pointing to the fact that economic growth in the transition period from 1998 to 2002 was slow compared to that of the New Order era.

Yet, after a couple of rough years in the midst of democratic transition, the Indonesian economy started picking up and grew dramatically from 2005 to 2010. The country’s gross domestic product (GDP) per capita, Yudo said, grew even faster than during the authoritarian regime of president Soeharto.

“If we put this in a political context, the growing perception that democracy is a hindrance to prosperity is not true,” said Yudo.

Yudo also pointed out that countries that switched to a democratic government had around 20 per cent higher economic growth in 30 years compared to non-democratic ones.

“We will only see the benefits in the long term and this might be why we hesitate and end up needing reassurance that democracy is the right way to achieve prosperity in the long term,” Yudo said.

Moreover, democracy is also closely tied with economic sources of growth, like education levels and lifespan through improvement of educational institutions as well as health care.

Rizal Mallarangeng of the Freedom Institute cautioned those who were drawn into the economic success of non-democratic countries.

“Only through a democracy could countries like the United States replace a disastrous administration like that of Trump with a more credible one, and now we can see that they have been able to improve the Covid-19 situation very quickly,” Rizal said.