While full results will not be made official for a few weeks, early polling counts show that Partai Democrat (PD), the political vehicle of President SBY, achieved 20.28% of the popular vote. This is nearly three times the 7.5% it achieved in the 2004 parliamentary elections and is comfortably ahead of the two main political party rivals, Golkar and PDI-P, both of which received just over 14% of the vote. With more than 20% of the house seats, PD will be the only party technically able to field a presidential candidate in July without needing to garner any additional support through the formation of a coalition.
However, the consensus in Indonesia is that to effectively have enough support to enact new legislation, one needs to control a greater proportion of parliamentary seats, and most expect PD to once again form a coalition government in order to do so. Early suggestions, which have subsequently been quashed by disagreements over running mates, pointed to the most likely coalition partner once again being Golkar. Were such an alliance again be formed, together the two parties would form a strong government, with a predicted 55-60% of the house seats. More importantly, this would likely negate the need for elections to go into a second round after July, as the threshold for forming a government is 50.1% of total votes. Avoiding the second round would enable the country to move ahead and put the distractions of elections and associated political manoeuvrings that comes with them behind it sooner rather than later.
In the current coalition, Golkar’s influence has been perceived by some as a barrier to key reforms. It is now hoped that President SBY, through selecting a vice-presidential candidate who is more closely aligned to his vision for the country, will be able to lead in his second term with more authority.
No matter how possible new coalitions play out, with more direct voter support should he serve a second term in office, SBY should be able to take a far more resolute decision-making approach in implementing sweeping changes and reforms, and more aggressively pursue his fight against corruption. In 2004, when PD won only 7.5% of the votes, they were required to appoint a mixed cabinet of diverse political interests, which increased the need for consensus seeking. In line with investors’ desires for a more reformist government, many are eagerly awaiting to see who will be chosen for critical ministerial positions and appointed to lead the major state-owned-enterprises (which comprise nearly one third of the national economy).
Overall, the SBY government has been applauded for its quick response to the global financial crisis and general handling of economic matters when it comes to fiscal and monetary policy. Surveys over the past few years show direct correlations between perceived economic performance and the popularity of the president by voters. SBY’s popularity also stems from his strong stance against corruption and a reduction in red tape – both of which have been appreciated by the investment community.
Results of the parliamentary election also point towards the people of Indonesia moving further in favour of secularist politics, with Islamic parties having lost significant support since 2004. Some 40% of voters chose Islamist-defined parties in 2004, while this time around their support fell to 30%
While by no means able to single-handedly offset the impact of a global recession on the country, high-level spending on election campaigning is also set to provide a healthy stimulus to domestic spending. According to AC Nielson Indonesia, total advertising expenditures are expected to jump 25% this year as a result of the elections. While according to Bank Mandir Sekuritas, total election spending could reach $4.3bn, a substantial injection into the economy.
Overall, all signs from election results so far point to continued political stability and a pro-economic, development-minded government for the next five-year term. This has even greater relevance today given the political unrest currently experienced in neighbouring countries. While the global recession points to reduced economic growth for Indonesia in the 4-5% range – down from the 6.1% expansion achieved last year – this is still a decent figure in comparison to regional competitors. While there is still speculation about how the leading candidates will construct their coalitions and who they will select as running mates, investors are quite confident that Indonesia’s path towards political and economic maturity is set to continue in the right direction.
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