Many Australians awoke appalled today - those that had gone to bed at all, as many did not - to learn that two of their citizens had been executed by firing squad in Indonesia overnight for drug offences. It has proved an emotional time, and the nation's politicians have followed the popular mood: Prime Minister Tony Abbott said today that he would withdraw Australia's ambassador to Indonesia, a move that was widely applauded in Australian media and among the public on radio and online comment sections.
Socially and politically, there are a number of issues at play here, and I'll get my own opinion out of the way right here before we turn to the substance of the piece. Personally I think the death penalty is wrong for numerous reasons, among them the obvious - what if you're wrong? What if the law changes so that something's no longer punishable by death? You can't bring them back - and the broader question of accountability (how do any of us, even collectively, have the right to take human life?) I recognise, though, that anyone directly affected by crime is going to come at this from a different point of view. I recognise, too, that southeast Asia has long fought a difficult problem with the drug trade; that it states in GREAT BIG WRITING in every airport and customs document that the penalty for drug offences, whether in Indonesia or Malaysia or Singapore or Thailand, is death; that all that President Joko Widodo has done is enforce his country's own laws, and a judgment made under a supposedly independent judiciary during the tenure of an administration he was no part of; and that there is an uncomfortable inconsistency in the many Australians who are now signing pledges never to visit Indonesia again, but who appear to have no qualms about visiting Thailand (which has executed Australians on drug charges), or China or the USA (which have executed thousands, and will continue to do so). Turning the pendulum back the other way again, it's worth pointing out that Indonesia is distinctive for the cosiness and interference between government and judiciary, which is unhealthy at the best of times, but particularly when involving putting someone to death; also that the circumstances of this case are particularly emotive because the Australians in question had been inside for 10 years, shown clear signs of rehabilitation, and - crucially - were still in the process of appeal. We could go back and forth like this all day.
But this is an investment blog, and the reason I have been prompted to write about the subject here is this. The Jakarta Composite Index dropped 4.3% in the middle of the day, then rebounded, but still ended up 2.6% down. Bloomberg reports that PT Bank Central Asia dropped 3.9% and PT Unilever Indonesia 5.1% - they're the two biggest companies by market cap.
Is this because of executions? Well, maybe it is. Australia is a vital trading partner for Indonesia, with A$12.1 billion of two-way merchandise trade between the two countries in the year to June 30 2014, according to Bloomberg; a trade agreement between the two was underway, and Australia's trade minister Andrew Robb canned a delegation that was about to fly to Jakarta because of the executions. When an ambassador is withdrawn and the popular mood in Australia is such that it's not unreasonable to expect a boycott of Indonesian goods, and certainly of holidays to Indonesia, then there will be an economic impact.
Indonesia's position, though, seems to be that this is a matter of sovereignty, that Australia will send its ambassador back sooner or later (which it surely will), and that Widodo is simply doing what he said he would - making things happen more quickly, be they infrastructure development, legislative progress or - regrettably - long-stalled executions.
For foreign investors, progress under the Widodo administration has failed to match the hype anyway, with growth under pressure and recovery unclear. It is fair to say that executing Australians (and let's not forget the Nigerians, Brazilian, Ghanaian and Indonesian who died with them) adds to a sense of grim toxicity.
Chris Wright is the author of No More Worlds to Conquer, published by HarperCollins.
