Indonesian newspaper Investor Daily reported that on Friday 9 May 2014 Joko Widodo, the presidential candidate of the PDI-P (winner of the April 2014 legislative election), will announce his running mate for the presidential election. According to the newspaper, Surya Paloh - founder of the NasDem party - said that the running mate (vice-presidential candidate) has already been agreed upon although he declined to mention a name. The PDI-P and NasDem formed a coalition last month in order to nominate a presidential candidate.
In the legislative election, which was held on 9 April 2014, political parties needed to win at least 25 percent of the vote or 20 percent of seats in the 560-seat House of Representatives (DPR) in order to be able to nominate a presidential and vice-presidential candidate for the July presidential election. However, the winner of the election (PDI-P) only managed to secure around 19 percent of the vote (based on the quick count result), implying that all political parties need to form coalitions in order to meet the aforementioned threshold. Last month it was reported that the PDI-P will form an alliance with Surya Paloh's NasDem, which won about 7 percent of the vote.
Parties' presidential and vice-presidential candidates run as fixed, inseparable pairs in presidential elections, and that is why the composition of the pair is of high strategic importance.
Joko Widodo, the current governor of Jakarta - and who is widely known as Jokowi -, is the most popular candidate for the upcoming election. Due to his 'pro-people' attitude, humble background, and the fact that he is one of the few high-positioned Indonesian politicians who dares to stand up against religious intolerance (as well as civil servants' laziness), Jokowi can rely on wide-spread support in Indonesia, and particularly on Java.
However, the name of Jokowi's running mate will remain a secret until Friday 9 May 2014. Several candidates for this position are Mahfud MD (former Constitutional Court Chief Justice), Jusuf Kalla (former Vice-President), Ryamizard Ryacudu (former army Chief of Staff). The name of Surya Paloh, however, is rarely heard although he also has high political aspirations.
Perhaps the most popular pair would be Jokowi-Kalla as both can rely on significant popular support, including support from market participants. When Jokowi announced on Friday 14 March 2014 that he would join the presidential race, Indonesian stocks immediately rallied 3.23 percent, while the Indonesian rupiah exchange rate improved markedly as well. This phenomenon became known as the 'Jokowi-effect'. However, its effect was evened out after it became known that the PDI-P did not clinch a strong victory in the April legislative election (previously it was expected that because of the Jokowi effect, the PDI-P would record a huge win, securing at least 25 percent of the vote).
If Jokowi's running mate would be Jusuf Kalla, then chances are big that we can see another rally on the Indonesian stock market as well as the money market (the 'Jokowi-Kalla effect'. However, such a rally will be short-lived as there are plenty of external and domestic factors that worry investors and who thus prefer to engage in profit taking. These factors include the continued US Federal Reserve tapering issue (and possible interest rate hikes), the slowing economies of China and Indonesia, a looming new El Nino cycle, the possible further reduction of fuel subsidies in Indonesia, the country's current account troubles, and more.
Indonesian Legislative Elections 1999-2014:
¹ based on quick counts, not the official result
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