Home News Indonesia Stalemate, but Widodo Expected to Prevail

Indonesia Stalemate, but Widodo Expected to Prevail

Stockholm (Ekonamik) – The first simultaneous presidential and legislative elections on April 17 in Indonesia – the largest economy in Southeast Asia – ended in a stalemate despite a majority of polls calling the election for incumbent president Joko Widodo. Both presidential contenders claimed victory, however, despite Mr Widodo claiming an average of 10 percentage points over challenger Prabowo Subianto in independent polls. Mr Subianto is refusing to concede.

Mr Widodo’s party, the ruling Indonesian Democratic Party for Struggle (PDI-P), appears to remain the largest party in the country, while Mr Subianto’s party, the Great Indonesia Movement Party (Gerindra), has failed to become the second largest party despite being predicted to do so. Mr Widodo’s ruling coalition will, however, have a smaller majority in the 575-seat Indonesian parliament.

Final election results are expected May 22, as 155 million ballots across the archipelago make their way to Jakarta for the final count, but Indonesia’s General Elections Commision (KPU) may announce a quick count result within a week, following a polarising seven-month campaign revolving around identity politics as much as it did the economy. The election was marked by sharpening religious and ethnic divides between the Javanese heartland and eastern Indonesia’s minority enclaves on one side, and religiously conservative West Java and the Muslim-dominated islands of Sumatra, Sulawesi and Kalimantan on the other.

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A quicker result in the world’s fourth most populous nation with the largest Muslim majority may be for the best. Mr Prabowo insists pollsters have manipulated exit polls and immediate election returns, setting up a scenario where the legitimacy of the election may be challenged, further exacerbating sectarian divisions. But a win for Mr Widodo would mean an extended rally for Asia’s best-performing major equity market in the past decade, according to experts, and his defeat could trigger an economic upheaval. He remains the market favourite to win.

Economic growth has averaged 5% annually since Mr Widodo took office, short of the 7% he had promised in his first term. Current government projections are growth at 5.3% in 2019 and 5.5% in 2020, which may be challenging to sustain against the backdrop of slowing global growth and unresolved U.S.-China trade tensions. Mr Widodo ran a campaign based on a big infrastructure overhaul and raising social welfare spending, while Mr Prabowo ran on tax cuts and a protectionist platform to spur domestic industry, which he claimed during the campaign would result in growth of 7% in the third year of a five-year presidential term.

The Indonesian economy, however, has structural problems. Despite a positive jobless rate of around 5% on the surface, a large amount of people are underemployed, working less than 35 hours a week, with a third of the workforce classified as such. Mr Widodo says 100 million jobs will have to be created over the next five years, a tall order. In addition, Indonesia’s current account deficit stands at around 3%, making the economy vulnerable as Indonesia remains reliant on foreign capital to fund import needs, something which contributed to triggering an emerging market sell-off in 2018 and a depreciation in the Indonesian Rupiah (which bounced back earlier this year due to Central Bank intervention raising interest rates and the U.S. Federal Reserve’s belt tightening earlier this year).

Indonesia needs foreign investment to help pay for development, including for the infrastructure programmes underway under Mr Widodo. Foreign Direct investment dropped 8.8% in 2018, and a challenge will be to open up the country, not least due to an Indonesian law stipulating the amount of FDI allowed in various sectors. Either way, the country is likely best off with a continuity of the current government, though tensions are likely to exacerbate, particularly if Mr Prabowo continues to challenge the legitimacy of the election.

Image: Ballot boxes used for Indonesia’s 17 April 2019 elections for the president, both houses of the People’s Consultative Assembly and two levels of regional government (wikimedia  commons).

Glenn W. Leaper, PhD
Glenn W. Leaper, Politics Editor, is a political theorist, analyst, editor and writer. He completed his Ph.D. in Political Philosophy and Critical Theory from Royal Holloway, University of London in 2015. His research focuses on ideology, unaccountable structures of power and surveillance capitalism. He is also a communications consultant, speechwriter, interpreter and journalist. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in Literature and a BA in International Relations.

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