Jacob Shapiro: Hello listeners and welcome to another episode of Cognitive Dissidence. As usual, I’m your host. I’m Jacob Shapiro. I’m a partner and the director of geopolitical analysis at Cognitive Investments. Joining me on the podcast today is Kevin Evans. He’s the Indonesia director at the Australia Indonesia center.
Like so many of our guests Kevin is somebody that I reached out to quite a bit. Cold email into the ether and Kevin responded. And not only did he respond, he was an absolutely terrific guest. And I really want to thank him for his time. He is based in Jakarta. So that means listeners that I stayed up late here.
It was early morning for Kevin and late evening here for me. I’m actually on the road recording this podcast. So if you check this out on YouTube, that’s why it looks like I’m in a Hampton Inn because I am in a Hampton Inn right now. But this was actually a really great way to, to talk about, we’re going to do some more episodes about.
Indonesia’s elections. I think this is one of the most important countries in the world that nobody is talking about. And also from an investment perspective really interesting one that we’re doing a lot of due diligence and research about for our clients and our strategies at CI.
Okay. Enough preamble for me. Kevin is the interesting part. If you want to talk about what we do at CI, if you want to talk to me about anything, this podcast books, Food recommendations in whatever city you’re in. I am at your disposal. Take care of the people you love. Cheers and see you out there.
Kevin, thank you so much for answering a cold email from somebody who could have been, strange and nothing to you, but you’ve been very gracious and happy to have you on the podcast. Thank you for joining us.
Kevin Evans: Delighted to speak with you, Jake. It’s great to meet you.
Jacob Shapiro: So I feel like most of the time, especially an American audience, but in general in the West I would doubt that most people could even point to Indonesia on a map let alone name the capital or do anything else.
But I will say they, Indonesia has been Lopped into the democracies having elections this year. We get the India, Indonesia, United States and Mexico. So there’s a little more interest, I think, the normal out there for Indonesia. But before we get down to the election, what’s been happening recently, how to think about it just give the, you were already giving me some of your background, so I’m going to make you repeat it for the listener.
So just tell me how it is that somebody from Australia ended up in Indonesia for as long as you have.
Kevin Evans: It started actually, these many life changing events happen at a kind of a flick of a moment, right? So when I was joining my high school in Brisbane, Australia, The headmaster said, here at this school, son, we teach three languages, French, German, or Indonesian.
Which do you want? And my answer was all of my mates around the playground are all doing French and German, and those countries are so far away, I’ll never meet them. Indonesia is certainly closer, so I’m bound to run into them during my lives. That sounds a bit more interesting. So I’ll take Indonesian.
And that completely turned my life. So I enjoyed the studies. And got really interested in the, the culture and the broader aspects. Made a first visit during the end of high school year. My teacher took us for a trip. And I decided during high school, I’m going to do Indonesian studies at university.
And fortunately, we had a great university nearby that taught modern Asian studies. So I just delved further. And the more I got into it, the more, addicted I became. A couple of exchanges later, and I realized I really enjoyed it. Being in the country. So I meandered and ended up with the department of foreign affairs and trade and just waited in Canberra until they would finally renege and post me to Jakarta, where I basically have been since the early nineties.
And so after several years there I eventually pensioned myself out of the public service and joined a merchant bank from Australia in the stock market. And waited, lived through the Asian financial crisis. I think every decent stockbroker has to go through a boom and a bust. And so I went through that one.
And I also just wanted to stay here until the old man. President Suharto until he finally went because I seriously believe the country would have been a better place after and I’ve been so delighted that’s exactly what’s happened. So I got very much involved in the political reform issues working with President Habibi’s legal reform.
He had a bunch of political scientists that were leading the reform of the political system for democratization, worked with the Electoral Commission, and anyway, various other things. The only time I was out was when the United Nations bribed me to go to Afghanistan for a year, when they kicked the Taliban out for the first time to help set up the governance programs there, based upon a lot of experiences from Indonesia.
Jacob Shapiro: I know you’re obviously speaking tongue in cheek, but I can’t help it, but ask, so what does a UN bribe look like to get you out of the chosen home that you have to go to Afghanistan of all places?
Kevin Evans: That’s true. I’m in the stock market. People were always trying to bribe me to go to Hong Kong, London and New York when they fail.
So somehow the UN got me to Afghanistan. I think at the end of the day, it was thinking. So much has changed in Indonesia over these past few years. It might be very useful actually to get a refresher. A different perspective on developments in a Muslim majority country to see it from the perspective of another country.
And obviously, Afghanistan was a key issue at the time, a key, global challenge and focus at the time. And so I thought, okay, finally, yeah, I’ll go for a year. And then I’ll come back because I’ve got to help prepare for the 2004 elections in Indonesia. But so happily went along and it was a very valuable experience.
It was it was incredibly useful.
Jacob Shapiro: I guess my first question, before we get into the elections and sort of the things that are more immediate, you have seen, So much change happened in Indonesia. You’ve alluded to Suharto. Just the past five years has been like an incredible change in Indonesia, let alone what you’ve seen.
So what are the things that have changed the most when you reflect back on all of these decades that are there? What would people not even believe was your first experience of the country and how has it changed?
Kevin Evans: Sure. This is actually my eighth election that I’ve gone through in Indonesia.
So I’ve been to the polls. I’ve seen very pre democratic elections very democratic elections and this past one, which gave me some pause for concern. So I think Something happened and I’m still struggling to work out what it was. So after the last elections in 2009 19 something suddenly changed.
The government stopped and the parliament stopped being concerned about public concerns in many respects. Started legislating on high, you might say. Without the standard kind of public and public consultative processes that we’d come to expect since the early reform period. And I’m not exactly sure, I’m still struggling to understand what exactly it was.
Go back to a couple of the earlier elections, I always have a couple of funny little vignettes. One was the proud declaration from a governor of one province. That President Suharto’s party won 95 percent of the vote in the elections, which was an impressive effort.
But it was announced a day before polling. So, so we’ve come a long way since since those days. But during this particular election cycle, the president has come out using an interesting Javanese term, not an Indonesian language term, but a Javanese term to say he thought it was his business to I think, I guess the best way to translate would be to manipulate intrigue into the elections.
And so I think there has been some unhealthy and it felt a bit sad, frankly, like the last election under President Suharto was a very sad election, frankly. The year before, they’d violently moved in to remove Megawati from her party’s control and that shot down any pretensive sort of media media contestation.
Although they, during the actual election period, it was a very interesting period because they actually did provide some fair coverage for the two minor parties. But obviously once you’ve orchestrated so beautifully before the election, whatever happens on the campaign itself is pretty meaningless.
The thing that left me feeling a bit sad was there was completely no need to behave like that. It was quite clear the president’s preferred candidate was always going to win this election. Once we knew that there were three candidates and where they were situated, he was a shoo in. So whether, the only issue was whether it was one or two rounds.
And the Constitution demands that anybody who wins here doesn’t just have to be the most popular person, say like in the U. S., you’ve actually got to be the most acceptable. And that means you’ve got to show that 50 percent of the public will put up with you. So it’s a very good dynamic. And I think it also prevents radical polarization.
So with three candidates in the race the man in the middle was was but for a ball. So as soon as that was out, he was unbeatable because the voters for the right candidate would never jump across to vote for the left and the left would never vote. It’s like in the U. S. you wouldn’t get MAGA people voting for Bernie Sanders and you wouldn’t get the Bernie Sanders people voting for a MAGA candidate.
You’d vote for somebody who was who was moderate in the middle. Now, the question that has to arise is there a reasonable gravitas? people who are in the, who are in the middle. And I think the political culture that works around them at a 50 percent plus system probably encourages that rather than agitating your angry red meat base from whatever base that happens to be at the expense of everybody else.
So that was that was why. A general proposal, yeah, a proposal that was unbeatable from that period. There was frankly no need to engage in all this all this kind of intrigue and and behavior, which kind of, I think, denigrates to an extent the good work that had been undertaken by the.
10 years of this president.
Jacob Shapiro: Yeah, on the point about MAGA people voting for Bernie I actually I remember very vividly being at a wedding in rural Georgia where I grew up and you know asking some of the folks there who you’re voting for and they all said trump And I was like just it was just beginning to come into my consciousness that trump was actually had a fair Had a puncher’s chance.
And of course he ended up winning. But I was curious and I asked them so who do you like more on the democratic side? If you had to vote for Hillary or Bernie, who would you go for? And to a man and to a woman it was at least Bernie tells the truth. Hillary is the worst. We hate Hillary more than anything else.
So there’s something about the spectrum. Perhaps I
Kevin Evans: should have said AOC. I perhaps should have said AOC rather than Bernie, because yes, Bernie also attracts what I, you might call it the shit kickers, the ones that’ll say, Let’s just do it and see what happens. So yeah, I think that you’re correct.
And that actually doesn’t surprise. I’m sorry. I should have said AOC rather than Bernie.
Jacob Shapiro: So having been around for Suharto though so does the manipulation of the intrigue, does it feel like a return? Does it feel like something completely new? I know you said you’re struggling to put it into words yourself, but is there a nostalgia to it?
Or do you think that some new force is at work behind all of this?
Kevin Evans: Firstly, we’re nowhere near what was going on there. So whatever’s happened now is still is whatever used to happen in the old system is degrees way more extreme than anything that’s been attempted thus far. And also the pushback was minimal and certainly no effective pushback under the old system.
There are still capacities now to make yourself heard. And the parliament while much of it’s been brought into the governing coalition, actually the lead party supporting the Of the president himself are actually leading efforts to establish a parliamentary inquiry to look at the various the impacts of these various intrigues and so forth that have that have gone on.
So there is still the system is a lot more robust. Then it used to be, but that’s not to say, and I also take caution from things I’ve seen in the U. S., that, the guardrails can fall apart if you’re, if you’ve got a leader that simply doesn’t care. About such things or believes they’re above it or whatever it else is, I think they’re the only one that can save the country.
And so you can get into some sort of a bubble that allows you to justify undermining well established norms and standards and so forth. And I think that’s a little bit where we are. The big question is our incoming president and What kind of legacy he would like to leave for the country.
Jacob Shapiro: And what do you think that legacy is? He, Prabowo is he’s a chameleon. He has changed so many different times. I’m not sure who he actually is. Do you have any sense?
Kevin Evans: Yeah, I first of all, now he’s in his seventies. So I think the earlier kind of, the younger Proboa with the fire in the belly has perhaps matured a bit.
And I’ve also, you’ve got feedback, or comments back from people who didn’t used to like him. To say that they’ve noted that he’s changed in the last few years. He’s much more relaxed in himself. And I also think he has a very strong sense of humor. nation’s narrative, even more than the incumbent president, much more than the incumbent president and of where Indonesia can sit within the world and also of his family’s place within the national narrative.
And that would weigh upon him quite a bit. And I think in a positive way, not a negative way, would he want to conclude his presidency? facing the opprobrium that his former father in law, his late father in law, President Suharto, faced for so many years? Or would he like to be seen as someone who contributed well to the strengthening of the Indonesian state?
And so I know that there’s a kind of a proclivity around, I think, strong leader equals strong state. And of course it’s quite the reverse. And so I’m very interested to see how he would see and I believe He has a sense in a, and I believe that to be in a positive way of what sort of a legacy he would like to leave.
And so I actually go in with a slightly different view to a lot of others. A lot of others have never moved forward from the horror stories that we’re all more than familiar with. And frankly I think also One other point that I definitely say in his favor is pretty much most of the generals or other senior people in Indonesia, when anybody comes to raise questions about their human rights record.
They usually start screaming hysterically PKI, Indonesian Communist Party, as if that’s some sort of a legal defense or a moral defense or any kind of defense against any kind of questioning. Unlike all of those President elect Prabowo has actually reached out to people who have been impacted.
Through his chains of command. And many of those people have actually joined with him in his party and so forth. And that’s not just within Indonesia. I have to say I, I bore witness to I think was one of the most surrealist moments in my life. So around about 20 odd years ago, 2001 or so, we were just beginning to implement the regional autonomy or the decentralization of Indonesia program as part of the wider democratization issue.
And because I’ve been involved in much of that work with the president of the former president’s team. I was often involved with these, talk shops where we’d be trying to explain what was going to happen. And so I rock up to this one and suddenly Mr. Prabowo is is a fellow speaker, which struck me as very interesting.
Nice to meet you, Pat. And then just as this session was about to begin the announcer says, Ladies and gentlemen, we have a very special guest today. I’d like you to welcome Mr. Janana Guzma. And I thought, did I hear something different? And so suddenly, entering stage less left is Janana.
Prabowo jumps up walks across great big bear hugs. And then the program soon begins. So I spoke to the people afterwards and I said, and earth happened then. And they explained after the session. Prabowo took Janana with him, went to his car, told his driver to go home for the night.
He personally drove Janana for six hours around Jakarta, just talking, just the two of them. Wow. And it’s not in the slightest bit surprising that in the soon after, and his victory isn’t yet been formally declared, right? So it’s just provisional, looks pretty obvious, it’s not going to be overturned.
So it’s so the final result will be as it’s projected. Now, he has already been invited by the president of East Timor to visit before or after inauguration. And that would clearly be because of the Prime Minister, who’s currently Jean Marc Guzman. So I think in that regard, he’s demonstrated the capacity to reach out in a way that is quite unusual in this country.
And just find there are some very interesting aspects. That I think people tend, have tended not to focus on. They’ve focused on some of the other stuff which is not always very nice but they’ve not focused on his capacity in those areas, which I find to be extremely refreshing and offer prospects for for the country to begin to deal with some of the some of the abuses that have taken place and in many respects my feeling is just grabbing somebody and saying it’s all your fault rather misses the point because the nature of those abuses under the previous regime was standard operating procedure.
Now, if you were a military person operating in the logistics or the peacekeeping end you’re not going to be involved in that tough kind of conflict side. But if you’re at the strike end of the armed forces I’m sorry, that’s part of, parcel of what ended up having to happen. So I think that there is also for the nation itself to begin to confess up to the fact that what happened historically was part of the standard operating procedures and the same thing would have been meted out to anybody anywhere across the archipelago Not just in the fringe areas beyond the tourist cameras.
And so to me, part of the process is actually to say we got to learn about what happened. We don’t want that ever to happen again. Let’s stop personalizing this and grabbing a couple of individuals and blaming them for everything. Let’s actually understand how this came to be. So we don’t repeat this appalling behavior again.
Our country can grow as a much better country by not including this as part of our repertoire of dealing with citizens who have come to a different opinion to the national policy. Yeah,
Jacob Shapiro: It’s not just strange for an Indonesian context. It’s strange. Strange is maybe the wrong word. You don’t see many politicians with that capacity to change and to have it be that genuine.
Do you think that is why Jokowi. Pick Tim, or how do you explain why Jokowi went with Prabowo? Because I’m a not, I’m more than a novice compared to you. I know nothing compared to you about Indonesia, but like when it first seemed like he was going to be the heir apparent, I was very confused and I’m sure other people who, have a dilettante approach to
Kevin Evans: Indonesia.
That’s a very easy one to explain. Imagine for a moment, in a parallel universe, that he had given his full support to candidate Ganja from his own party, from the PDIP party, led by, uh, Party chair for life, Megawati, former president. He would know, the day after Ganjawan, that he and his family would be expunged from the political process by Megawati.
Any future that he or his family might have thought they could have, would be under serious serious, probably fatal threat from her. She neither forgets, forgives, nor moves on. And she believes that he has been insufficiently obeisant to her, and same thing for the family. And so she would see him as simply disloyal and therefore has to be removed.
As has so many other people over the decades that she’s been in charge of a party. She runs a very tight ship on the other end of the spectrum worried to have thrown his support behind Agnes Buswaden highly unlikely. But were he to have done that, it would be likely that he would have faced a not dissimilar kind of outcome and his whole positioning on the political spectrum would have been undermined because Zarnist ran a campaign basically appealing to right wing kind of sentiment.
So that wasn’t where he at the end of the day, he had no choice but to support candidate Pribyl. And interestingly enough, they’ve really seemed, from everything that we’ve seen, to have developed a great rapport. So it’s more than just, I think, a bit of quick opportunism. I think there is definitely a mutual recognition and there’s certainly a mutual respect from Pat Prabowo himself to Pat Jokowi.
They do, there is a feeling of a, of affinity and collegiance. And President Jokowi has a similar feelings for Prabowo. So actually it’s an alliance that’s made. By something a little bit more than just tactical opportunism in order to get over the line for the next election. Secondly, he really had no option politically anyway, other than to go with Prabowo.
And so I think what we will see with time, obviously, is as as Prabowo moves into the presidency, his authority will enhance. But the Jokowi and his family and so forth will be free to pursue their political careers as they want within the country without inhibition.
Jacob Shapiro: What what differences do you think we’ll see in Prabowo’s policy versus Jokowi? And will those be immediately apparent? Will they take a long time to emerge? Do you think the affinity resonates on those policy lines? Or do you think that Prabowo will really try and put his own stamp on, on his approach to Indonesian government policy?
Kevin Evans: This man has wanted to be president since he was, since before Jokowi was born. He does have a couple of so what I tend to look at is not what he may have said in this particular election, but what’s he’s been saying over a longer period of time, because that to me suggests genuine commitment rather than, what have I got to say to get over the line for this election?
Right. Regards to the current government, it’s very interesting that what they’re actually doing normally is they’re And this would be the same thing in the US. So a new president coming in basically has to start from scratch by having their agenda beginning to be put into the budgetary processes and all of that sort of stuff.
So as often as not you waste a year before you can begin to implement what you’d want to do. This government, the outgoing Jokowi government, has actually begun to include within its proposed budget for next year initiatives that President elect Prabowo has been promoting. So this program that he’s announced for lunch and milk for children across the country.
Is one of those where they’re working now to include that within the budget papers for next year. So by the end of this year, that will be endorsed. And so the incoming government will be free to begin implementing one of its key initiatives from the start of next year. So that’s a very, I don’t recall that happening in any of the other transitions before.
So that to me is a very interesting development and clearly suggest a That collegiate process will continue. Now he does have a couple of other initiatives, which will be new. So he’s stated an intent to continue with the new capital city in Kalimantan in Borneo, that’s fine. But he’s also had a program for a long time of trying to develop a special development authority that will cover Jakarta and the broader megapolitan around Jakarta, million people.
So at this stage, that cuts across three separate provinces. So Jakarta is a province, Banten is a province, and West Java is a province, but there are highly urbanized regions on the fringes of Jakarta. So he’s had this idea for a long time that we need to integrate development across these regions, whether it’s transport, social services, and other kinds of social and physical infrastructure.
That’s been a commitment for a while, and he’s It’s often suggested that be seated done to the office of the vice president. So really elevated even above a ministerial position. So I believe that continues to be one of his commitments and that’s something that’s not been raised by any other candidate that I’m familiar with in in any of the candidates.
So he’s also indicated a endorsement of the continuous downstreaming process, but the effort for minerals production. We need to understand that’s an article of faith in Indonesian industrial policymaking. This didn’t, this wasn’t invented by Jokowi. It wasn’t invented by President Yudhoyono.
This goes way back decades before. And it’s a fundamental belief that for a country to become a developed country, developed countries don’t export raw materials. They actually export manufactured products. Now, I think when they say that they’ve never looked They have only ever looked north because Australia doesn’t do any kind of manufacturing.
It’s all just dig it up and flog it off. But for everybody else around, around the Asia Pacific region in particular, their view is that if you want to be a developed country, you’ve got to have a serious manufacturing capacity. So going way back to really the end of the seventies, right through to now, successive governments have looked at ways of forcing the pace.
on processing raw materials into manufactured products for export. And so it’s largely been seen as a success. And for nickel, it’s been again quite a super success in many ways, but there are some side effects. Some of them are a little more problematic copper, I would say, because the value added.
That you get from, spending a billion dollars to have a copper processing mine is simply not worth the effort because the value added is only about 5 percent or something very low like that. That’s what I’ve been told. Bauxite might be an option. But then even on the copper thing, you might go, upstream rather than downstream.
So companies that use copper, they might want to invest in that because they’re not going to be paying a lot more for the copper that’s being produced. A different model could be applied there in order to encourage that. So that I would not expect a great deviation from that kind of of a process.
Jacob Shapiro: Let me ask you to put on your stockbroker merchant banker hat for a second. Are you bullish? Are you bearish or are you just sitting in between? There, I, if you look at sort of Indonesian opportunities, they’ve been muted. It hasn’t really been that volatile, but it feels like indonesia’s in the right place at the right time.
It has all the right minerals. It’s doing all the right things. I often joke that, five, seven years ago, Indonesia was the redheaded stepchild of the IMF and the World Bank. It was always, Oh, they’re not doing things well. They’re not efficient. And now it’s like completely flipped on its head.
It’s like actually Indonesia is doing the right thing and Malaysia and the neighbors are not doing the right thing. But how do you feel about just economic and investment performance of Indonesia in the future? Because it’s been a laggard over the last 15, 20 years.
Kevin Evans: One of the things about Indonesia.
And this is actually a quote from somebody quite quite prominent here, was to indicate that Indonesia is the largest invisible thing in the world. It’s simply not on anybody’s radar. And I think you made the point at the outset that people are simply not familiar with it. So the first thing is people need to be aware of this country is, has and that, that’s, that I think is the start.
That I think will be a much changed position under the incoming president. The incoming president is much more comfortable dealing with international audiences and to do so in a much more elevated and pluralist way in terms of to speak on a range of issues, not merely bring me some money and I’ll flog off some stuff.
So that’s been the front and center part of foreign policy over the last 10 years. With some distractions because of the wars, the war in in Ukraine which has disrupted trade. And so therefore that suddenly said, gee, we got to do something about that. And in terms of global inflation and resource costs and so forth.
So that was, that kind of forced a focus beyond standard, standard trade and investment concerns. President will have a much broader view and understanding of what. Of those sort of strategic issues and a much greater comfort zone in engaging, particularly with the West. As Indonesia has since the early 1950s, always avoided any kind of pact or military arrangement, military alliance with any country.
And they will continue to do so they will be, they will continue to be a leader of the non aligned movement, but within that non aligned perspective that they manage, they can drift a little to this side or drift a little to that side and so during the late Sukarno period, they drifted quite a bit towards, What they used to call a sort of a towards Beijing.
They, the old communist party was, had quite close relations with the communist party of China. So the country itself drifted a little bit down that direction during the Sahara period, they drifted towards China. Towards more towards the West. I think in the last 10 years, a lot of people would say they’ve they’ve situated quite closely with China particularly because of investments in strategic areas, strategic minerals, nickel and so forth.
And haven’t been especially, I would say, haven’t been especially aggressive in pushing back against unilaterally treed Nine Dash lines and various other interventions into Indonesian territorial waters. My, my view would be that President Prabowo, certainly as a military man, would take a more up front approach.
A tougher approach on those kind of issues and negotiation, and I think would like to have a more balanced relationship with Western countries but at the same time, would be looking forward to increasing trade investment with them as well to counterbalance, but it would be within the framework of continuing to ensure Indonesia remained a non aligned country but would be very happy to partner and work with With with all sides but I think he’d be more inclined to willing to be invested diplomatically in strengthening his relationship with the Western nations.
So it’s I guess in some respects up to the western nation. So they want to embrace him or not
Jacob Shapiro: Does that mean though? So I mean is that good for the indonesian economy? Is that bad for the indonesian economy or indonesian companies you think going to be able to take advantage of this? It’s a very young market from that point of view So but it’s also I put it in there with brazil and with india And you know some of these rising powers and rising markets, but indonesia in some ways has You know has more advantages than a lot of these rising powers.
So are you similarly optimistic or do you think that some of the things that Indonesia has to face about its past or rise above are going to hold them back as it has in recent years?
Kevin Evans: Yeah, I think look, they’ve always got options to move forward. And they’re well placed in a region with reasonably good growth prospects to be able to take advantage of that.
So that’s always a strength. What kind of policies would help? They’ve slipped recently. As I said, something changed in 2019. So just a bit of an outline on the Transparency International’s Corruption Perception Index. Which most people track. Yes, we all know the ques There are issues on the methodology and perceptions versus reality and perceptions versus sensitivity.
One that always made me laugh was when Megawati became president. Indonesians were screaming that this was grand nepotism, because a father had once been president, even though he died 30 years before any of this ever happened. In Singapore, when the current prime minister became prime minister, and his father was still sitting in cabinet, did the Singaporeans scream grand nepotism?
No, they said this is the cream rising to the surface. So if there’s no sensitivity, we get that. I get that. But in terms of the Corruption Perception Index itself, Indonesia had been at the bottom of the world at the time of the transition. So it was not a good place in that regard. And in, in countries in transition, it takes a little time to get your strategies right, and your institutional arrangements right.
So after 2004, we had an a corruption eradication commission with considerable powers put in place. And what we saw was a continuous increase, slow but steady until 2019 when the country actually entered the top half of the world. It was an extraordinary national achievement to have come from the bottom of the world, slow but steady actually entering the top half of the world.
And then after 2019, it’s gone back to where it was 10 years ago. Really problematic, and the components of the calculation for Indonesia were on political risk. Not in terms of electoral, because it still rose in the three previous election cycles. So it wasn’t electoral contestation that was the political risk.
It was clearly other things. That was seen as a political risk and that would obviously have included sort of an erosion of guardrails of due process and stuff like that. So that’s where I think there’s some important homework for the country to focus on and for the leadership to really focus on as well as to demonstrate a recommitment to those kind of standards because that will eventually have an impact on the cost of capital.
On the cost of doing business on general perceptions of whether you want to do business and so forth, and more importantly, what kind of investors would be willing to wander into that field? And are they really the kind of investors that you believe are going to present the best opportunities for really developing the country?
And so I, my view is that they do need to start taking this a lot more seriously than than they have been. It was a, it was incredibly sad. To see this slippage.
Jacob Shapiro: And you really can you vent can you venture a guess? Do you have a working theory about what turned around in 2019?
Or is it really just a mystery right now?
Kevin Evans: I’m really struggling, but it may have been overconfidence by the incumbency to say we can do it. We can do this. And to get away with it. You’ve got a massive overweight sort of coalition committed to supporting the government. And unlike, strangely, in the last few years, unlike the U.
S. where even when you’ve got the same party in charge of the White House, the Senate, And the House of Representatives, the poor old president can’t get anything through that Congress. So it’s actually not an issue of of partisan divide. It’s actually, it’s not like you have a loyal opposition like you do in a parliamentary system.
You actually have a constitutional opposition between the the legislative branch and the executive branch. And that becomes the problem. But here they’ve managed to subdue the legislative branch to the point that it’s really not, Raise much of raised effective opposition. There are a couple of parties that are not part.
party to the government, but they’re, they are very small percentage of the parliament. And not not so able to really hold the government to account on, on, on difficult issues. But I would say it’s more the norms. It’s not like you’re breaking a law. It’s no, you’re abrogating norms that have been built up over 20 years.
So in many respects, that to me is what’s really important. You don’t have to legislate every single. Bit of behavior that yeah, that’s an appalling kind of a system. There should be norms that people accept as part of the way you behave. And so when you stray beyond that, there should be consequences.
And quite clearly, that’s not been the case.
Jacob Shapiro: How do you feel about Australia, Indonesia relations? Do you feel that they’re progressing? Again?
Kevin Evans: Yeah. So actually, again, in the wake of the election our deputy prime minister has already come up and broken bread with the president elect.
They’d actually been working together over the last couple of years because the deputy prime minister is also our defense minister. So has been his natural counterpart during this time, and I would expect as usual, the Prime Minister will attend in the inauguration of the President in, on August October 20.
They’ve everything that I’ve gathered, they’ve enjoyed their partnership with him in the various policy fora that they’ve established over the many years to engage with. So I’m not really expecting a, a. Any sort of surprise downsides at this stage in the bilateral relationship between the two countries.
We hope to move ahead on things like EVs, critical minerals. These are things that are important to both countries. So I think we’ve vested interests, as you could say in ensuring that goes well because it has big implications for both economies in the region. And one of the fundamental bases of our, the trade agreement, the trade investment and people movement agreement, the sort of the comprehensive economic partnership agreement that was signed into force about three or four years ago is a view that we should see the commercial relationship.
Not merely a matter of what we can each flog off to each other, recalling that collectively we’re about 2 percent of the world economy, but actually what we can do together that creates new competitive advantages, enabling what we produce collectively to enter the much bigger 25 percent of the region.
And so that become that’s become an important informing mindset into both the negotiations and post contractual arrangements. So I think in that regard, it’s good. What we from, really from an Australian perspective we now run a significant trade surplus, at least on the current account with Indonesia.
We also do with Japan, Korea, China probably Thailand. And that’s because these countries have industrialized and become incredibly prosperous. On the basis of having secure access to quality, affordable resources from Australia. And so then they buy this, whatever we flog off the ground in Australia, convert it into manufacturing value added, and then go on and take on the world.
So they have huge surpluses with the world. Just happens to be they have big deficits with us. Whereas on the other hand, we run a huge deficit with the US and with Europe. Because you’re not buying our stuff. You’ve probably got better sources closer to where, wherever you’re all from. So Indonesia will need to understand that dynamic as well.
And if they were to try to pursue some kind of a mercantilist view that, every grain of whatever is sent from one side has to be equated with something else, they’ll miss the bus again and Vietnam or India will end up being the next big ship off the road around Asia for serious industrialization benefiting.
from what Australia is able to provide. So I’m hoping that kind of understanding will filter through many of the policy people here so that they understand the great value that Australia provides to them and better provision because it’s even closer than was Japan and China and Korea when they were going through their industrialization program.
So they’re actually have slight better benefits, bigger benefits in some of these issues than the others did. So that’s, I think an important part of the policy dialogue that we need to work on between the two countries.
Jacob Shapiro: You’re based in Jakarta. How long have you been in Jakarta now?
Kevin Evans: So about so four years in Aceh, most of the rest of the time in Jakarta, a year in Makassar in South Sulawesi, little bit of time in Jogja. And a bit of time in Bandung and upriver in the center of Kalimantan, but it’s mostly been in Jakarta.
Jacob Shapiro: Will you be making the move to the new capital along with the government or sticking where the culture is?
Kevin Evans: Yeah, I also spent a few years living in Canberra. Canberra was dedicated to be the capital city around about 1910, I think. The Provisional Parliament opened in 1927 when I arrived there in 1988, we had two television stations but It, it has prospects for being an incredibly attractive city.
When as this has been something that’s being part of an Indonesian dream for since President Sukarno in the mid fifties, right? Mid to late fifties. The idea of the capital being somewhere closer to the center of the country. So this is not a new thing. And there have been several efforts to try to push this idea forward and they’ve all fallen on their face.
As I said, one thing about this president is when he sets his mind to something, it happens. And so he’s able to push beyond the sort of the bureaucratic or corporate vested interests that will try to scuttle something if they don’t win and all of that sort of stuff. So when I heard that the deputy of the development authority was a property developer who was somewhere in one of the, running part of the, one of the big conglomerates here, I, my, my initial sort of reaction was, Oh God, what does this mean?
But then I visited the city where he had been what you might call the CEO. So on some of the fringe cities around Jakarta, the satellite cities, they’re basically private sector, conglomerate development, urban centers where hundreds of thousands of people eventually live there.
They have to manage the integration of everything, the transport and everything like that. And so as I’m heading off the highway, This is like the first time in decades that I’ve visited that part of the region. I suddenly felt myself breathing easier. As you turned off, it was as if I could see a city built into the forest.
Not the usual thing of you knock everything down and start putting up trees. This literally felt like I was moving into, and it was the most wonderful, Relaxing feeling. And I thought to myself, if this is Jokowi’s vision for what Nusantara should look like, this will be quite a spectacular place. So as they were just soon after they decided to go there, I visited.
And of course, what I discovered was there are actually no trees there. What there are there, there are no forests there. There are a lot of trees because all the trees were knocked off. The forest was destroyed decades ago. And replaced with pulp and paper, eucalyptus trees from Australia that are pretty bad for the water table, frankly.
And in my view, absolutely no loss to humanity if all of those rotten things are removed. And if they could actually use that as an opportunity to replant with indigenous species, we could actually see a recovery. And so most of the Nusantara zone is actually not for development. It’s actually for for redevelopment, replanting, reforestation, and all of that.
So it’s a little bit like the Australian Capital Territory. Canberra is only one small part of the broader territory. Australian capital territory zone. In, in my view, it actually offers an opportunity to begin to re, to repair some of the long-term damage that was done through deforestation back in the eighties and nineties.
And so I’m, any of the environmental issues start sniffling and crying about the poor, orangutans or whatever. There are no orangutans there and there are no, and there are no indigenous trees. There’s also undulating kind of territory, so actually, even creating waterways, little lakes, again, could could enhance both the attract, attraction of the region, deal a little bit maybe with the heat issues but but also, help maybe to secure water resources a little bit better than they may be able to secure at the moment.
Mixed picture, yeah. What I want to what I want to leave I’ll take a look when I start to see what’s going on. But my suspicion is possibly not at this stage, but very keen to see how it develops. I also think that there’s no great hurry to shift there tomorrow. So the president’s been absolutely almost manic about getting it built as quickly as possible, ostensibly to ensure that no subsequent successor can say we’re going to stay in Jakarta because the investment has been simply too significant.
But do they need to finish it tomorrow? No. There’s a marvelous date of 2045 when the country turns a hundred. So there are plenty of opportunities, I think, to get things prepared. Do it beautifully, not a quick and dirty, do it beautifully. And you’ll really have a capital of which the whole nation should be incredibly proud.
Jacob Shapiro: Is there a similar level of urgency for helping fix Jakarta and the problems that it has? I often think of, I live in New Orleans myself, like when you look around at the cities that are at the front line of climate change, Jakarta’s, it’s gonna experience a lot of these things that we’re worried about from a climate change perspective earlier than everywhere else.
Is there some awareness of that? Is it just, it’s too far gone? Like, how do you live with that on a daily basis?
Kevin Evans: I don’t have any problems, actually. Where it is the northern end of the city. That’s where the problems are. And, for some bizarre reason, some very rich people have all decided they want to move there.
And so they build these reclaimed areas. And so I don’t know how long it’ll be before they start to face troubles. That’s really literally on the northern tips of Jakarta facing into Jakarta Harbour. I’ve also travelled up to northern Jakarta on a beautifully sunny day and suddenly come to flooding in the roads.
And I’ve also, visited this hotel on the shoreline that used to have lovely grass at the front. Now it’s underwater. So yeah you absolutely can see the impact of both sea level rising and also groundwater removing reducing. And so then the salination into the water table, which is advanced many kilometers south.
Jakarta you need to understand is a city that’s moved over the 350 odd years. So it moves south pretty much every generation. It’s continued moving south. So unlike many other cities where I guess you you build over an earlier era, this place has moved further south. So there are of residue, even going back to the Dutch East Indies Company Day.
Forget about the Dutch East Indies Colonial Administration from the 19, Beginning of the 19th century. Going back to the Dutch East Indies, Verenigde Indische Compagnie, the VOC. Back before that in the 17th, 18th century. You’ve seen back there an early independence period.
Then there was by the turn of the century, I guess we’d probably move towards what they call a Hotel Indonesia roundabout. And now we’re probably closer towards near the Senayan roundabout. The city actually moves south. And the further south you go, obviously you start to rise up.
It’s not as if There aren’t options to dealing with it, but yeah, at some point, you’re just going to have to leave some of this land and that’s going to have horrendous implications, particularly for people who own land there and so forth so there are a lot of Dutch people at one stage looking to sort You know, do the Dutch answer with sort of polders and stuff like that to see whether that might work.
But there are dozens of rivers that flow through Jakarta to the sea or tributaries. And so that’s that’s an additional challenge as to how you deal with that. Even if you’re trying to build polders and dams and walls. But I would have thought there are ways to do, you actually start to refill in aquifers under the ground and and work a lot harder on building proper.
Town water delivery systems. So people don’t have to be drilling wells and sucking up the water table. So the damage being done by salination and also drying out, I think part of that is to ensure that there are technologies that allow you to send rainwater back into towards the aquifers and there is technology to allow that.
That would be a very useful thing to do to stop the pace of land subsidence at least.
Jacob Shapiro: Absolutely. Before I let you go let’s do, this really has nothing to do with geopolitics, but in some way it has everything to do with geopolitics. I’m curious what your favorite thing to eat is. In Jakarta.
What about Indonesian cuisine has captured your imagination or has it? Is it everything else about Indonesia and the food’s not good? I don’t know much about Indonesian food.
Kevin Evans: I spent a year in Makassar, so I absolutely have to say Choto Makassar, which is a kind of a meaty, brothy kind of dish which I really enjoy.
And obviously the satays are always excellent. There’s a very nice one from Central Java called satay buntel, which most people don’t know about, but chicken satay goat satay. We don’t have many sheep here, but goats. I would also say rendang, obviously, you can’t go beyond rendang.
Anything with durian in is always a great, is always a great thing. I know that that’s always controversial. Durian’s always a controversial fruit. You either love it or hate it. There’s no middle ground on that one.
Jacob Shapiro: It makes sense that an Australian who probably likes, Marmite and Vegemite would then go and be okay with
Kevin Evans: durian.
Jacob Shapiro: Yeah,
Kevin Evans: that is true. They actually have their own version. I say they have their own version of Marmite. The Malaysians and Indonesians have their own version. Indonesians call it trasi, Malaysians call it belacan, and it’s actually made from fermented fish head fermented prawn heads, and it’s often used as a kind of a flavouring in various kind of savoury dishes and it has a very pungent smell, so I say that’s their version of Vegemite.
Jacob Shapiro: Good. You’re right at home. Kevin, thanks so much for taking the time. This was a pleasure for me. I hope you enjoyed yourself, and I hope you’ll agree to come back on. This has been
Kevin Evans: absolutely awesome, and I hope your viewers get some fun out of it as well.
Jacob Shapiro: I’m sure they will, and Indonesia, it may be invisible, but it’s not going anywhere.
I think it’s going to be increasingly more important, so I hope you’ll continue to come on and tell us. Spot
Kevin Evans: on. Look forward to again. Thank you to everybody.
Jacob Shapiro: Thank you so much for listening to the cognitive dissidents podcast brought to you by cognitive investments. If you are interested in learning more about cognitive investments, you can check us out online at cognitive dot investments as cognitive dot investments.
You can also write to me directly if you want at Jacob at cognitive dot investments. Cheers and we’ll see you out there. The views expressed in this commentary are subject to change based on market and other conditions. This podcast may contain certain statements that may be deemed forward looking statements.
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