Jenny Soesanto Lange
HRM Issues for German Companies Establishing a Subsidiary in Indonesia
ISBN: 978-3-8366-4209-5
Herstellung: Diplomica® Verlag GmbH, Hamburg, 2010
Zugl. Hochschule für Wirtschaft und Umwelt Nürtingen-Geislingen (ehemals FH
Nürtingen), Nürtingen, Deutschland, MA-Thesis / Master, 2009
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ii
Abstract
Indonesia, with over 240 million people and rich of natural resources and
abundant human resources, is very attractive for investors operating in wide array of
industries.
Many reports on Human Resource Management (HRM) and the English journals
have written about the developing countries in Europe, Africa, and Asia (countries such as
Hong Kong, China, and India), but surprisingly, writing on HRM issues in Indonesia has
been rare and limited to mainly to labor economics and macro-level Human Resources
Development (Bennington and Habir, 2003, pp. 373-374). Therefore, this thesis intends to
make a contribution to literatures of HRM issues in Indonesia, especially for German
companies which are establishing their subsidiaries in Indonesia.
This study examines Human Resource Management Issues in Indonesia for
German subsidiaries from environment context such as political, economical, socio-
cultural, technological, environmental and legal perspective (PESTEL Analysis); culture
dimension difference between Indonesia and Germany; and the current issues of
managing human resources in Indonesia by firms, especially for multinational companies,
such as issues of general condition of labors, recruitment and selection process,
compensation appraisal, performance management, trade unions, gender and children
workers.
iii
Acknowledgements
I would like to thank many people who directly or indirectly contributed to
development and completion of my master thesis. Foremost, I would like to thank my
husband, Michael Lange, for his support and motivation; my father, Eddy Soesanto and
my sisters, who motivated and prayed for me. Their support was invaluable, especially
through the final few weeks of the finishing this master thesis.
Specifically, I would like to thank my supervisor, Prof. Dr. phil. Richard Wilcox,
for
his unwavering academic support and his patience to assist me until I accomplished this
project.
I respectfully acknowledge the contribution of the many book authors, whose
their books I used as references in my thesis and also some Human Resource
Development (HRD) consultant companies in Indonesia that help me by providing
references.
Most of all, I am grateful to my uncle, Susanto, for his financial support so that I
could take my master degree in Germany.
iv
Table of Contents
Abstract
ii
Acknowledgments
iii
Table of Contents
iv
List of Figures
vii
List of Tables
viii
Abbreviations
x
1
Introduction
1
1.1
Problem Statement
2
1.2
Purpose of Study
2
1.3
Assumption and Limitation
2
1.4
Methodology
3
1.5
Definition of Terms
4
1.5.1
Human Resource Management
4
1.5.2
Human Resource Management Issues
5
2
Indonesia in Overview
6
2.1
Geographical Framework
7
2.2
Climate and Resources
8
3
PESTEL Analysis of Indonesia
9
3.1
Political Analysis of Indonesia
9
3.1.1
Political System
10
3.1.2
International Relations
10
3.1.3
Terrorism Issues
11
3.1.4
Internal Conflict Issues
12
3.1.5
Corruption Issues
12
3.1.6
Military Politics
14
3.2
Economical Analysis of Indonesia
14
3.2.1
Foreign Trades
15
3.2.2
Foreign Direct Investment
16
3.2.3
Currency and Banking
17
3.2.4
Job Growth and Unemployment
17
3.3
Socio-cultural Analysis of Indonesia
18
3.3.1
Demographics
19
3.3.2
Ethnic Groups and Religion
20
3.3.2.1
Ethnic Groups
20
v
Table of Contents (Continued)
3.3.2.2
Religion
21
3.3.3
Languages
22
3.3.3.1
Regional and National Language
22
3.3.3.2
Official Language
23
3.3.4
Education
23
3.3.5
Health
25
3.3.6
Human Development
26
3.4
Technological Analysis of Indonesia
27
3.4.1
Intellectual Property Rights
27
3.4.2
Research and Development
28
3.4.3
Maturity of Technology
28
3.4.4
Telecommunication
29
3.4.5
Transportation
29
3.5
Environmental Analysis of Indonesia
30
3.5.1
Environmental Issues
30
3.5.2
Environment Regulation
31
3.6
Legal Analysis of Indonesia
32
3.6.1
Legal System
33
3.6.2
Labor Law
33
3.6.3
Tax System
35
4
Comparison: Cultural Dimension between Germany and Indonesia
37
4.1
Performance Orientation
38
4.2
Assertiveness
40
4.3
Future Orientation
42
4.4
Humane Orientation
43
4.5
Institutional Collectivism
45
4.6
In-Group Collectivism
45
4.7
Uncertainty Avoidance
46
5
Human Resource Management Policies and Practices in Indonesia
49
5.1
General Condition of Employment
49
5.1.1
Type of Employment
49
5.1.2
Disability and Older Workers
49
5.1.3
Wages System
50
5.1.4
Working Hours
52
5.1.5
Worker' Social Security
52
5.2
Recruitment
53
5.3
Personnel Selection
58
vi
Table of Contents (Continued)
5.4
Compensation Appraisal
60
5.5
Performance Management
64
5.6
Trade/Labor Union
66
5.7
Gender Issues
70
6
Conclusion and Recommendation
72
Reference
75
Appendix A
82
Appendix B
83
vii
List of Figures
Figure 2.1 Map of Indonesia
7
Figure 3.1 Bribery Payers Index in Indonesia 2008
13
Figure 3.2 Age Structure of Indonesia's Population 2009
20
Figure 3.3 Education System in Indonesia
23
Figure 4.1 Culture Dimension Difference (Society Practice):
37
German versus Indonesia
Figure 4.2 Culture Dimension Difference (Society Value):
38
German versus Indonesia
Figure 5.1 Sample of Recruitment Advertising
57
Figure 5.2 Selection Procedures in Large Companies in Indonesia
59
Figure 5.3 Measurement of Candidates' Qualification
60
viii
List of Tables
Table 2.1 Indonesia Key Facts
6
Table 3.1 Opportunities and Threats of Indonesian Politic for German Companies
10
Table 3.2 Opportunities and Threats of Indonesian Economic for
15
German Companies
Table 3.3 FDI Growth in Indonesia
17
Table 3.4 Number of Employees in Indonesia by Sectors 2008
18
Table 3.5 Working Age Population in Indonesia by Activity and Education 2008
18
Table 3.6 Opportunities and Threats of Indonesian Socio-culture for
19
German Companies
Table 3.7 Demographic Highlight of Indonesia
19
Table 3.8 Languages Spoken in Indonesia
22
Table 3.9 Top Indonesian Universities 2008
24
Table 3.10 Opportunities and Threats of Indonesian Technology for
27
German Companies
Table 3.11 Opportunities and Threats of Indonesian Environment for
30
German Companies
Table 3.12 Opportunities and Threats of Indonesian Legal for German Companies
32
Table 3.13 Special Tax Rates to Specific Type of Corporation in Indonesia
35
Table 3.14 Graduated Scale of Taxable in Indonesia
36
Table 4.1 Germany versus Indonesia: Higher versus Lower Performance Orientation 39
Table 4.2 Germany versus Indonesia: Higher versus Lower Assertiveness
41
Table 4.3 Germany versus Indonesia: Higher versus Lower Future Orientation
43
Table 4.4 Germany versus Indonesia: Lower versus Higher Humane Orientation
44
Table 4.5 Germany versus Indonesia: Lower versus Higher Collectivism at Workplace 45
Table 4.6 Germany versus Indonesia: Lower versus Higher In-Group Collectivism
46
Table 4.7 Germany versus Indonesia: Higher versus Lower Uncertainty Avoidance
47
Table 4.8 Germany versus Indonesia: Higher versus Lower Uncertainty Avoidance at 48
Workplace
Table 5.1 Minimum Wages in Some Provinces in Indonesia 2007-2009
50
Table 5.2 Number of Jamsostek Members 1999-2007
53
ix
List of Tables (Continued)
Table 5.3 Attrition Rates in Indonesia 2006-2007
54
Table 5.4 Type of Recruitment Companies in Jakarta
56
Table 5.5 Wages Composition (includes Compensation) in Large Companies
62
in Indonesia
Table 5.6 Compensation Appraisal for Expatriate Workers in Indonesia
63
Table 5.7 Working Population in Indonesia by Main Industry and Sex 2008
70
Table 6.1 Summary: HR Issues Affected by Indonesian Culture
73
x
Abbreviations
ASEAN
Association of South East Asia Nations
BAPEDAL
Badan Pengendalian Dampak Lingkungan,
Environmental Impact
Management Agency
BAPPENAS
BI
Badan Perencanaan dan Pembangunan Nasional
,
The National
Development Planning Agency
Bank Indonesia, Central Bank of Indonesia
BPS
Badan Pusat Statistik, BPS-Statistics Indonesia
CDC
Communicable Disease Control
CIA
Central Intelligence Agency
COG
Certificate of Guarantee
CPI
Corruption Perception Index
DPD
Dewan Perwakilan Daerah, Regional Representative Council
EVP
Employment Value Proposition
FDI
Foreign Direct Investment
FES
Friedrich Ebert Stiftung, Friedrich Ebert Foundation
GDI
Gender-related Development Index
GDP
Growth Domestic Product
GEM
Gender Empowerment Measure
HDI
Human Development Index
HIV/AIDS
Human Immunodeficiency Virus/ Acquired Immuno-Deficiency Syndrome
HPI
Human Poverty Index
HRD
Human Resources Development
HRM
Human Resources Management
ICW
Indonesia Corruption Watch
ILO
International Labor Organization
IP
Intellectual Property
Jamsostek Jaminan Sosial Tenaga Kerja, Social Security
KPK
Komisi Pemberantasan Korupsi, Commission Eradication Corruption
KSPSI
Konfederasi Serikat Pekerja Seluruh Indonesia, Indonesian Confederation of All-
Indonesian Trade Unions
xi
Abbreviations (Continued)
LIP
Lembaga Informasi Perburuhan
MAS
Masculine Index
MPR
Majelis Permusyawaratan Rakyat, People's Consultative Assembly
MSMes
Medium-Sized Enterprises
NGO
Non-Governmental Organization
NRC
Non-refundable Certificate
P.T.
Perseroan Terbatas
PESTEL
Political, Economical, Socio-cultural, Technological, Environmental, Legal
R&D
Research and Development
RBIs
Resources-Based Industries
ROA
Research on Asia
TAI
Technology Achievement Index
TCI
Technology Creation Index
TRIP
Trade Related Aspect of Intellectual Property Rights
UNDP
United Nation Development Program
UNESCO
United Nations Educational, Scientific and Cultural Organization
USA
United States of America
USAID
United States Agency for International Development
WHO
World Health Organization
1
1
Introduction
Indonesia has a strategic position on major trade routes and possessing a rich
variety of natural resources. With total numbers of 17,508 islands, the Archipelago is on a
crossroads between two oceans, the Pacific and the Indian Ocean, bridges two
continents, Asia and Australia, and has hundreds of different languages. These factors
have created a highly diverse environment and society. They influence the social, political
and economic life of the country. Under such circumstances, HRM of foreign companies
establishing subsidiaries in Indonesia, have numerous challenges.
Chapter 2 and 3 start identifying the overview of Indonesia and what kind of
environment aspect such as politic, economic, socio-culture, technology, environment
and legal of Indonesia influence Human Resource Management policies and practices in
Indonesia. Furthermore, this part addresses the opportunities and threats for German
subsidiaries in Indonesia regarding HRM Issues. It is an essential introduction part for
German companies in order to optimize opportunities and minimize threats, when they
establish subsidiaries in Indonesia.
Since international business involves the interaction and movement of people
across national boundaries, an appreciation of cultural differences is essential. Research
into these aspects, which is explored in Chapter 4, helps us to understand of differences
the culture dimension between Germany and Indonesia that influence human resource
policies and practices. The object of this chapter is to help in managing, working together
and dealing with the difference in thinking, feeling, acting and reacting of German and
Indonesian people. This study uses the research of GLOBE Study of culture dimension
such as Performance Orientation, Assertiveness, Future Orientation, Humane Orientation,
Institutional Collectivism, In-Group Collectivism, and Uncertainty Avoidance.
Chapter 5 examines the current issues of HRM in Indonesia, especially for German
companies establishing a subsidiary in Indonesia, such as general condition of
employment (type of employment, wages system, working hours, and worker' social
security), recruitment and selection issues, compensation appraisal, performance
management, trade unions, and gender issues. In this chapter show us, how political,
economical, socio-cultural, technological, environmental, and legal aspects; and culture
dimension of Indonesia, strongly influence HRM policies and practices in Indonesia.
2
The conclusion and recommendation as the last part, summarizes all of chapters
and underlines the most essential things of HRM Issues for German subsidiaries, an
overview of the current challenges for German subsidiaries, and suggests a
recommendation for the next research.
1.1
Problem Statement
There are about 250 German firms, which have subsidiaries in Indonesia. One
problem of their subsidiaries is Human Resources Management problems such as:
1.
What kind of environment context strongly affect HRM in Indonesia?
2.
What kind of ecruitment, personal selection, compensation appraisal, and
performance management method should German subsidiaries use?
3.
How to manage Indonesian people?
4.
How about discrimination (gender, age, ethnic, religion) at workplace?
5.
How about legal system in Indonesia?
Since writing on HRM issues in developing countries have been rare, includes
Indonesia (Bennington and Habir, 2003, p. 373), HRM literatures are more needed,
especially in this case, for German companies establishing subsidiaries in Indonesia.
1.2
Purpose of Study
The purposes of this study are:
1.
To address HRM issues in Indonesia for German companies establishing
subsidiaries in Indonesia from environment context.
2.
To explore the art of managing people in Indonesia based on culture dimension
aspects.
3.
To make a contribution to literatures of HRM policies and practice in Indonesia.
1.3
Assumption and Limitation
This study has the following assumption and limitation:
·
Assumption:
1.
Since Indonesia consists of more than 500 ethnics which have different habits,
customs and etiquette, this thesis has an assumption that the results of analyze
in Indonesian culture or situation are general result. The reason is because each
3
ethnic has its own culture and it is not easy to address each difference of them.
However, issues of some ethnics are addressed if there are some important
points relevant to Human Resources Management practices.
2.
In Indonesia, term Human Resources Development (HRD) is most used than
HRM, because HRM is seen as much broader than HRM, which tends to be seen
as "personal administration" (Bennington and Habir, 2003, p. 387). Although
there is a little bit difference between the definitions of both terms, this study
had an assumption that HRD is not distinguished from HRM.
3.
As HRM practices vary across enterprise types, industries, and regions, this
study just addresses the general HRM practices.
·
Limitation:
1.
By analyzing PESTEL of Indonesia, it is stressed only on opportunities and
threats for German companies establishing subsidiaries in Indonesia. The
political, economical, social-cultural, technological, environmental and legal
issues, which are not relevant to human resources management in Indonesia,
would not be discussed.
2.
Since GLOBE Study differ the regions of Germany into East Germany and West
Germany, by analyzing cultural dimension, this thesis limits `Germany' as `West
Germany'.
3.
By addressing HRM issues in Indonesia, this thesis addresses only the HRM
issues in formal and private sectors. Some issues in public or informal sectors
are explored, only if these issues are important to know or as a comparison to
formal and private sectors.
1.4
Methodology
This study used the following methodologies:
1.
Science Literatures Analysis
It was used particularly for Chapter 2, 3 and 5. The data was collected from
national and international institutions; national and international newspaper,
magazines, papers, thesis, dissertations, textbooks and from HRM/Management
Consulting in Indonesia.
4
2.
Comparative Study
Chapter 4 used more comparative study of data collection from textbooks and
some Intercultural Management Consultants.
1.5
Definition of Terms
1.5.1
Human Resource Management
The role of a definition in any field is important. This chapter helps identifying an
HRM definition in the global context.
Dowling, Welch and Schuler (1999, p. 2) define HRM as "activities undertaken by
an organization to utilize its human resources effectively. These activities would include
at least the following: human resources planning, staffing, performance management,
compensation and benefits, and labor relations".
In Indonesia, term "Human Resources Development (HRD)" most used than HRM,
because HRM is seen as much broader than HRM, which tends to be seen as "personal
administration" (Bennington and Habir, 2003, p. 387).
McLean and McLean (2001, p. 322) further define HRD as "any process or activity
that, either initially or over the long term, has the potential to develop adults' work-based
knowledge, expertise, productivity and satisfaction, whether for personal or group/team
gain, or for the benefit of an organization, community, nation or, ultimately, the whole of
humanity."
McLean and McLean (2001, pp. 321-322) also identify six findings related to HRD
in an international context. First, the most extensive HRD literature is in "the U.S. and the
UK, with India emerging as having extensive literature." Second, the influence of the U.S.
definitions may "be explained by the fact that many international students are being
educated about HRD in the U.S." Third, "professional organizations seem to play an
important role." Fourth, "the definition of HRD is influenced by a country's value system."
Fifth, HRD "is still in an emerging state in many countries." Sixth, "in several countries,
HRD is not distinguished from HR but is seen, systematically, as being a part of HR."
As mentioned in sub-chapter 1.4, this thesis uses HRM definitions as well.
5
1.5.2
Human Resource Management Issues
As defined above, HRM consists of the following activities:
1.
Recruitment
Recruitment is defined as "searching for and obtaining potential job candidates in
sufficient numbers and quality so that the organization can select the most
appropriate people to fill its job needs" (Dowling, Welch, and Schuler, 1999, p. 69).
2.
Selection Process
According to Dowling, Welch, and Schuler (1999, pp. 69-67), selection process is "the
process of gathering information for the purposes of evaluating and deciding whom
should be employed in particular jobs."
3.
Compensation Appraisal
Compensation can be defined as "any form of financial payment for basic work
responsibilities. It represents a commitment of some kind of the companies as a
payment to employees for working for the companies" (Piotrowski, 1992, p. 284).
4.
Performance Management
Performance management is defined as "an iterative process of goal setting,
communication, observation and evaluation to support, retain and develop
exceptional employees for organizational success, to reach organizational mission and
goals such as encourage and reward behaviors aligned with organizational mission and
goals, and curb or redirect non-productive activities" (Greenberg and Simunek-Appelt,
2008).
5.
Trade/Labor Union
According to Minister of Manpower and Transmigration Republic of Indonesia
(Republic of Indonesia,
KEP. 255/MEN/2003, Art 1)
,
a worker/labor union is "an
organization that is formed from, by and for the workers/laborers both in or outside of
the company, which is in nature free, open, independent, democratic, and responsible
to strive for, defend and protect the rights and interests of the workers/laborers and
improve the welfare of the workers/laborers and their families."
6
2
Indonesia in Overview
Selamat datang di Indonesia!
Welcome to the world's fourth most populous country in the world with over 240
million people from a multitude of ethnic groups, customs, religions and languages (The
World Factbook, 2009).
The name Indonesia is composed of two Greek words: "Indos" which means
Indian, and "Nesos" meaning islands. Republik Indonesia, or translatable as The Republic
of Indonesia, is not only the largest country in Southeast Asia with an area of 1.9 million
square kilometers, but it is also five times bigger than Germany.
Table 2.1 Indonesia Key Facts
Country Area (CIA)
Number of Islands(CIA)
1,919,440 sq km
17,508 islands
Country's Name
Capital City
Head of Government
Republic Indonesia
Jakarta
President Susilo Bambang Yudhoyono
Currency
GDP per capita (Economy Watch)
Inflation (BI))
IDR (Indonesian Rupiah)
US$ 2,246.27 (2008)
7.39% (Jan,2009)
Population (CIA)
Ethnic Composition
Major Ethnic (the latest census 2000)
Major Religion (the latest census 2000)
240,271,522
About 500 ethnic
Javanese (40.6%)
Muslim (86.1%)
Source: CIA, World Factbook 2009; Economy Watch 2008; Central Bank of Republic of Indonesia (BI);
Indonesia's Census 2000
Colonization by the Dutch started shortly after 1600. Then Japan occupied the
islands from 1942 to 1945.
The Dutch settled mainly on Java, where the company chose
as its `headquarters' the city of Batavia (the current Jakarta). From this period onwards,
Java was to be the center of Indonesian development (Tichelman, 1980, p. 105).
Jakarta,
currently the capital city of Indonesia, is still the economic center of the country, and
deep contrasts exist between the latter and the country sides, which is more often than
not characterized by extreme poverty.
7
2.1
Geographical Framework
Indonesia is located in Southeastern Asia, between 6
o
08' North latitude to 11
o
15'
South latitude, and from 94
o
45' to 141
o
05' East longitude. This location is a strategic
position on major trade routes and possessing a rich variety of natural resources. With
total area 1,919,440 sq km, consists of land 1,826,440 sq km and water 93,000 sq km, it
consists of five major islands and about 30 smaller groups. There are total numbers of
17,508 islands of which about 6000 are inhabited (CIA, 2009). Straddling equator, the
archipelago is on a crossroads between two oceans, the Pacific and the Indian Ocean, and
bridges two continents, Asia and Australia. These factors have created a highly diverse
environment and society. In short, its location
influences the social, political and
economic life of the country.
Figure 2.1 Map of Indonesia
Source: CIA. The World Factbook 2009
The five main islands are: Sumatra (473,606 sq. km); the most fertile and densely
populated islands, Java (132,107 sq. km); Kalimantan, which the third largest island in the
world (539,460 sq km); Sulawesi (189,216 sq km); and Papua (421,981 sq km) (National
Portal Republic of Indonesia, 2005). Indonesia's other islands are smaller in size. If we
compare Germany with 357,021 (sq. km) to Indonesia, Germany is only 66% total area of
Kalimantan or 18.6% of Indonesia.
8
The country has numerous mountains and some 400 volcanoes, of which
approximately 100 are active
.
Everyday Indonesia experiences three vibrations, at least
one earthquake a day and one volcanic eruption in a year. However, Volcanoes have not
only brought earthquake and disasters, but also fertility to the ground and abundant
supply of mineral deposits.
Moreover
,
with ten maritime neighbors - India, Thailand, Malaysia, Singapore,
Vietnam, the Philippines, Palau, Australia and Timor Leste - the task is particularly
complex for Indonesia. Meanwhile, maritime boundaries with the Philippines, Palau, and
Timor Leste are now under negotiation or in preparation for negotiation (Arsana,
February 2009).
2.2
Climate and Resources
Geography of Indonesia tells us not only about the land forms in Indonesia, but
also the flora, fauna, climate and resources of Indonesia.
Due to split by the equator, Indonesia has a tropical climate, with the coastal
plains about 28°C, the inland and mountain areas in average 26°C, and the higher
mountain about 23°C.
Indonesia has only two seasons, a dry season and wet or rainy season. In most
areas, the rainy season starts from December to March and dry season from May to
October (Frederick & Worden, 1993).
Because of its abundant natural resources, Indonesia has main comparative
advantages, which are actually in the form of resource-based industries (RBIs) such as
fisheries and ocean resources, agriculture, forestry, biotechnology, energy and mineral
resources and tourism, and non-conventional resources such as hydrate gas, deep sea
water industries, bio-energy from marine algae, pharmaceutical products from aquatic
organisms, wave energy, tidal energy and ocean thermal energy conversion (Dahuri,
January 2009).
9
3
PESTEL Analysis of Indonesia
Before addressing human resources management issues in a country in which we
would like to establish the subsidiaries, it is useful to analyze the environmental factors of
the companies, so that we could develop opportunities and avoid threats. The related
environmental factors for the can be classified into two main groups: internal and
external factors. The external factors consist of general environmental factors and
industry environmental factors. These general environmental factors are outside the
control of the firms but these factors influence the future development of the firms. One
of environmental study tools that focused on important factors of external environment
which are tremendously complex and dynamic is PESTEL analysis which consists of
Political, Economical, Socio-cultural, Technological, Environmental and Legal factors
(Analoui & Karami, 2003, p. 74-76).
PESTEL analysis are generally based on data sources such as newspapers, current
books, trade organizations, government agencies, industry, analysts, financial analysts. By
this method, we can imagine a more real picture of Indonesia and based on it, German
companies can maximize the environmental opportunities and minimize threats.
3.1
Political Analysis of Indonesia
The Republic of Indonesia then gained its independence from the Dutch in 1949
after a four-year anti-colonial insurrection. Independence was followed by a period of
parliamentary democracy which was replaced in 1959 by President Sukarno's "Guided
Democracy," which lasted until 1965.
President Suharto ruled Indonesia until 1998.
During this 32 year period, his authoritarian "New Order" provided the political stability
thought necessary by his supporters for fast paced economic growth.
A period of reform,
or "reformasi," followed Suharto's fall. Suharto was succeeded by B.J. Habibie (1998-
1999), Abdurrahman Wahid (1999-2001), and Megawati Sukarnoputri (2001-2004).
Despite the political instability during this period, a number of key reforms designed to
enhance good governance and expand democracy were implemented (Bresnan, 2005, p.
59).
A key test for President Susilo Bambang Yudhoyono, the current president, who
was elected in 2004 and re-elected in 2009, will be his ability to establish Indonesian
political legitimacy based on good governance and a more firmly established civil society
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