Indonesia’s Jack Ma?
Commentary by Wayne Forrest
On June 29 Nadiem Makarim, 42, son of well-known Indonesian attorney Nono Makarim, was convicted and sentenced to 10 years by Indonesia’s Corruption Court for incurring state losses and abuse of authority from purchases of Google Chromebooks when he served as Education Minister (2019-2024). Most of Indonesia’s internationally oriented business community (both local and expatriate) shuddered at the verdict. For many Makarim represented the best aspirations of Indonesians: modern, tech, digital. Seeing him fall so low after building Indonesia’s first unicorn, Gojek, hit hard. Having followed the trial closely, they couldn’t see strong evidence for the prosecution charges. The inexpensive Chromebooks were part of a ministry program created during the COVID era to help digitize schools and promote STEM and distance learning. Prosecutors in the case argued that an internal technical analysis favored Windows. If a school had weak connectivity in 2020 it’s a reasonable argument that a Windows laptop would have more offline applications. Defense attorneys argued that the ministry knew about the offline limitations, but the Chromebooks were overall a better value: less expensive and much easier to use. A majority of schools would be able to use them effectively. The prosecution convinced 4 of the 5 judges that Makarim intentionally steered the laptop program to Google’s Chromebook as part of a quid pro quo for their investment in Gojek (a ride sharing app) even though Google executives denied the claim and the prosecution presented the inference only and no evidence. The prosecution’s argument that there were state losses was effectively countered by the large difference in cost between a Windows vs a ChromeOS product.
What was at most a policy difference appears to have been criminalized. If no appeal is successful and a Presidential pardon does not appear, it may be time for Indonesia’s Parliament to consider creating or amending a law that decriminalizes state losses that occur for reasons of normal policymaking. However, that may not be enough.
There have been too many of these cases, too much innuendo that they occur because of manipulation of the justice system. The pattern is a losing or bypassed group, inside or outside a ministry, contriving a vendetta. The popular and effective governor of Batam, Ismeth Abdullah, was jailed in a fire engine procurement case very similar to this one. Chevron withstood a years-long case involving an approved bio-remediation project involving two subcontractors. Former Trade Minister, Thomas Lembong, was jailed briefly, then released after a Presidential pardon, for granting sugar import permits without proper inter-ministerial coordination. Karen Agustiawan, CEO of Pertamina, served time for losing money in a oil investment in an Australian offshore oilfield. Even though Indonesian state enterprises are market players, laws criminalize losses. Ministry insiders, often with ties to politicians or oligarchs opposed to the President, are suspected of being silent players in these actions.
Jack Ma, may not be the most appropriate analogous figure to Nadiem Makarim but there are striking similarities. Ma became one of China’s best known entrepreneurs after building the online shopping platform Alibaba. He criticized regulators and although he never was formally charged with a crime, he was subjected to intense political and regulatory pressure. Each created their nation’s first tech unicorns ($billion valuation) and we’re darlings of foreign investors. Whereas Makarim’s family had a history of public service, Ma’s did not; Nadiem went against a lot of advice to become Education Minister. Both men have advocated for changes in their country’s education methods toward critical thinking and away from rote learning.
Ma was under wraps for several years and seems to have had a resurrection. But it remains to be seen what will happen with Nadiem Makarim. As one early investor in Gojek told me, “Until he is free I won’t invest in Indonesia”. Nadiem’s father, the first Indonesian to graduate from Yale Law School, wrote that eradicating corruption in Indonesia was like the jungle. “You can cut a path though it, but it can grow back.” None of Indonesia’s post-Suharto era presidents have adequately addressed judicial and regulatory malfeasance and until they do Indonesia will continue to confound and even turn away many investors in what is arguably one of the most prospective emerging markets.
(The above remarks are the author’s and may not reflect the views of AICC or its members.)