Investors will need to keep an eye on Indonesia's political years of 2018 (regional elections) and 2019 (legislative elections) as the outcomes can have a big impact on the investment climate and business climate of Indonesia. Most eyes will be on the legislative and presidential elections of 2019.
Most businessmen and investors are expected to support incumbent Indonesian President Joko Widodo for a second term as Widodo - often called Jokowi - has shown that he is committed to implement structural reforms in order to make the fundamentals of the Indonesian economy stronger. This should then lead to accelerating and long-term economic growth in the future. His reform program includes significant infrastructure development spending, the winding down of energy subsidies, affordable housing for the low-income citizens, deregulation, and more room for foreign direct investment (FDI).
Despite Jokowi's commitment to structural reforms, Indonesia's economic growth has remained bleak, however, stagnating around 5.0 percent (y/y) over the past couple of years. The bleak external picture is partly to blame (weak global demand for Indonesian products and low commodity prices). But bleak domestic consumption (household consumption) is also to blame.
Often we are asked why Indonesia's economic growth has not been rebounding more sharply on the back of Jokowi's reform program. Well, the answer is time. It requires time to build infrastructure, it requires time for deregulation measures to be fully implemented up to the regional government level, and it requires time to see foreign investors jump into newly opened sectors. The fruits of Jokowi's performance in 2014-2019 are therefore assumed to be truly felt after 2018 or 2019. The question is: will Jokowi still be around in the presidential seat by that time?
Based on the latest opinion polls, Jokowi is the most popular presidential candidate for the 2019 election, if the election were to be held today. For example, according to Poltracking Indonesia, a total of 53 percent of respondents would vote for Jokowi. On second position comes the defeated candidate in the 2014 presidential election: Prabowo Subianto (with 33 percent of respondents' vote).
Meanwhile, Political Marketing Consulting (Polmark) Indonesia's survey shows similar results: Jokowi (50 percent) and Subianto (22 percent). It is interesting to note that - besides the two aforementioned men - there seem no other serious candidates. A couple of names circulate in Indonesian media (most notably Agus Harimurti Yudhoyono, Hary Tanoesoedibjo, Anies Baswedan, Gatot Nurmantyo, and Sri Mulyani Indrawati) but they all seemingly lack profound support among the Indonesian population.
Thus, for now, the 2019 presidential election is likely to become another race between Jokowi and Subianto. It is expected that Jokowi can rely on the support of PDI-P, Golkar, Nasdem, Hanura and PKB, while Subianto is expected to enjoy the support of Gerindra, PKS, and PAN. Meanwhile, other political parties, such as PPP and PD, seem to wait and see first.
Read more: Politics of Indonesia
In early August 2018 the presidential candidates need to be registered at the General Elections Commission (in Indonesian: Komisi Pemilihan Umum, or KPU). Considering a presidential candidate and vice presidential candidate run as an inseparable pair in the election, it is also important to know who will become the deputies of Jokowi and Subianto (although both these men are yet to confirm that they will be running for president in the 2019 election).
This is much less clear but not less important. In fact, in the case of Jokowi, if he were to have a successful second term up to 2024, then the 2019-2014 vice president may become a great presidential candidate for the 2024 presidential election. Several names that circulate in Indonesia media for Jokowi's vice president in the 2019 election are: Gatot Nurmantyo (army general), Agus Harimurti Yudhoyono (son of former president), Tito Karnavian (national police chief), Sri Mulyani Indrawati (finance minister) and Airlangga Hartarto (industry minister).
Meanwhile, Subianto may form a good pair with Jakarta Governor Anies Rasyid Baswedan. But the names of Gatot Nurmantyo and Agus Harimurti Yudhoyono also circulate in Indonesian media as forming a good pair with Subianto.
Indonesia Investments Poll:
Who will become Indonesian president in 2019?
Voting possible: -
- Joko Widodo (85.5%)
- Prabowo Subianto (9.7%)
- Other (2.1%)
- Hary Tanoesoedibjo (1.4%)
- Gatot Nurmantyo (1%)
- Agus Yudhoyono (0.3%)
- Anies Baswedan (0%)
Total amount of votes: 290