Indonesian president Susilo Bambang Yudhoyono, who will end his second and final five-year term in October 2014, announced to meet both presidential candidates (Prabowo Subianto and Joko Widodo) in the country’s State Palace on Sunday (20/07). In this meeting, president Yudhoyono will emphasize the importance of a peaceful and orderly transition to the next government. Currently, it remains unknown who of the two candidates won the presidential election (held on 9 July 2014). Due to the tight race, chances of social unrest increase.

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Global real estate services firm Jones Lang LaSalle expects condominium sales in Indonesia to post a record-breaking figure in 2014, particularly supported by the current trend in Jakarta (Indonesia’s capital city) where people continue to shift to apartment living instead of detached or attached single-unit housing. Anton Sitorus, head of research at Jones Lang LaSalle, said that despite the weaker outlook for Indonesia’s property market, both developers and buyers have shown increased interest in developing and buying property.

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Although investors in Indonesian stocks received positive news from the USA after Federal Reserve Head Janet Yellen stated on Tuesday (15/07) that the US economic recovery remains incomplete therefore justifying the continuation of a loose monetary policy for the foreseeable future as well as solid economic expansion of 7.5 percent (yoy) in China during the second quarter of 2014, the domestic political context in Southeast Asia’s largest economy remains a concern. What are the latest political developments in Indonesia?

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The US dollar continues to depreciate against emerging currencies after the minutes of the Federal Reserve’s latest FOMC meeting, released Wednesday (09/07), suggest that the US central bank will maintain historic low interest rates (0.0 - 0.25 percent) into 2015. The Fed informed that US interest rates hikes will only occur ”a considerable time” after the US asset-buying program (quantitative easing) has ended. Based on the latest minutes, this program is expected to end in October 2014.

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Although not all quick count scores indicate a Joko Widodo (Jokowi) win, Indonesia’s stock and financial markets have gained considerably on Thursday (10/07) - one day after the 2014 Indonesian presidential election - on speculation that the General Elections Commission (KPU) will declare Jokowi the winner of the election on 22 July 2014. Out a total of 12 quick counts (mentioned below), eight showed a Jokowi win. Importantly, these seven quick counts include the authoritative agencies that traditionally have been highly accurate.

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Since 07:00 am local time, Indonesians have been able to cast their votes for the country’s presidential election; a tight race between Joko Widodo and Prabowo Subianto. Despite the narrow gap between both presidential candidates (based on various surveys), the election has been conducted in good order so far. The polling stations will close at 13:00 pm local time. Hereafter, live quick count scores, which are traditionally quite accurate, will be presented. By approximately 17:00 pm local time, the quick counts are expected to be finalized.

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Today, the Indonesian people decide who will become the next president of the world’s largest archipelago for the period 2014-2019. The Indonesian electorate numbers about 185.6 million (out a total population of 250 million) and they have only two options to choose from: Joko Widodo (Jokowi) and Prabowo Subianto, which also implies that the election will only require one round. Voting starts at 07:00 am local time and the ballot boxes close at 13:00 pm local time. Indonesian financial markets are closed.

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Wednesday 9 July 2014, is a big day for Indonesia as on that day the Indonesian people will vote for the successor of incumbent Indonesian President Susilo Bambang Yudhoyono who had been given the mandate to lead two five-year presidential terms between 2004 and 2014 (and who is the only president in the era of Reformasi that was re-elected by the people). Now, the people have to choose between Joko Widodo (Jokowi), joined by running mate Jusuf Kalla, and Prabowo Subianto, who is joined by running mate Hatta Rajasa.

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After having seen his lead over rival Prabowo Subianto narrow considerably in recent months, the latest survey released by the Indonesia Survey Circle (LSI) today (07/07) indicates that presidential candidate Joko ‘Jokowi’ Widodo’s popularity has rebounded, although the race remains tight. According to the survey, Jokowi and running mate Jusuf Kalla secured 47.8 percent of respondents’ votes, slightly higher than their rivals Prabowo Subianto and running mate Hatta Rajasa at 44.2 percent.

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Indonesian presidential candidate Joko Widodo, more popularly known as Jokowi, intends to increase the government’s tax revenue by allowing foreigners to buy luxury apartments, worth at least IDR 2.5 billion (approximately USD $211,864), in the larger cities of Indonesia and on the island of Bali (a popular tourist destination). Currently, foreigners cannot buy property in Indonesia. However, indirect structures, such as the use of their Indonesian wife’s name or an agent are common, meaning that the state loses out on luxury tax income.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined 0.92 percent to 5,136.86 points on the last trading day of the week. Seven of the ten sectorial indices fell, led by the finance sector (-1.66 percent), followed by consumer goods (-1.50 percent) and manufacturing (-1.34 percent). The main reason for this poor performance is that investors are again looking at the true fundamentals of the Indonesian economy instead of optimism about Joko Widodo becoming Indonesia’s seventh president.

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In the past days, Indonesia’s fuel subsidy policy has been in the spotlight of Indonesian media continuously. When it was reported that incumbent President Susilo Bambang Yudhoyono (SBY) and newly elected president Joko Widodo would meet on the island of Bali this week to discuss various transitional matters, speculation emerged that the country’s generous fuel subsidies, which seriously burden the government’s budget as well as current account, might be wound down before the new government is inaugurated in October 2014.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rose 0.37 percent to 5,184.48 on Thursday’s trading day (28/08) on increased expectation that the transition from the Susilo Bambang Yudhoyono (SBY) government to the Joko “Jokowi” Widodo government will be smooth and efficient evidenced by the pair's meeting in Bali to discuss various matters regarding the transfer of power. For investors, this meeting led to increased optimism. Stocks in the property and miscellaneous sectors led the gain.

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It took almost six hours for the Constitutional Court of Indonesia (Mahkamah Konstitusi) on Thursday (21/08) to read out 300 pages of a lengthy 4,392-page verdict in the case filed by defeated presidential candidate Prabowo Subianto, who claimed that the result of Indonesia’s July 2014 presidential election was invalid due to widespread violations and fraud that allegedly occurred during the voting and counting processes. During the read out it became increasingly clear that the court would reject Subianto’s claims due to a lack of evidence.

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At 14:00 pm local Jakarta time zone, Indonesia’s Constitutional Court (Mahkamah Konstitusi) is expected to announce its decision on Prabowo Subianto’s election result challenge. The defeated presidential candidate filed a court case claiming that massive fraud and violations took place amid the voting and counting processes in the context of Indonesia’s July 2014 presidential election, won by Joko Widodo (securing 53.15 percent of the votes). Although the court’s decision is final and legally binding, Subianto not expected to surrender yet.

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Foreign ownership of plantations in Indonesia may be limited to a maximum of 30 percent if a new draft bill designed by Indonesian parliament is approved. This draft bill aims to encourage local participation within Indonesia’s plantation sector at the expense of foreign ownership. Currently, foreign ownership of plantations in Indonesia is set at a maximum of 95 percent. The draft bill also aims to simplify complex rules regarding land use, protect indigenous people, and will make it easier to prosecute companies responsible for forest fires.  

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When campaigning, presidential candidates will always promise a bright future in order to gain votes. It is particularly easy for a new presidential candidate to promise golden mountains as opposed to the incumbent president who needs to be more cautious making promises as people can point to the (failed) results of his promises during the presidential term. The 2014 Indonesian presidential election was particularly interesting as we saw two new presidential candidates and, thus, the ‘inflation of promises’.

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Indonesian stocks and the rupiah exchange rate showed great volatility on Tuesday’s trading day (22/07). In the first part of the day the benchmark stock index of Indonesia (known as Jakarta Composite Index of IHSG) and rupiah strengthened on speculation that market favourite Joko “Jokowi” Widodo would win the presidential election without riots or other incidents that could trigger political uncertainties. On Tuesday evening, the General Elections Commission (KPU) indeed officially declared Jokowi the winner of the election.

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Both the Indonesian rupiah exchange rate and Indonesian stocks posted a good performance on Monday (21/07). Main reason for this positive performance is increased speculation that presidential hopeful Joko Widodo has won the election. Based on information originating from the General Elections Commission (KPU), Widodo has won the election by a safe margin of five percentage points. On Tuesday 22 July 2014, the KPU will officially release the result. However, rival Prabowo Subianto will probably challenge the result.

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Recent elections in Indonesia have met with a great deal of attention and look to be a decisive moment for the country. We are looking at a country that has major financial problems and also is making a decision about the direction of its democracy. Prabowo Subianto has pledged to conduct a rollback in some of the aspects of Indonesia’s democracy. So the supporters of Indonesian democracy will be watching very closely to see how the recent election events will unfold.

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