American Indonesian Chamber of Commerce


The Political Season

The Political Season

The political season is underway in Indonesia.  Its political parties have begun announcing their candidates for President, although none have yet chosen their Vice-Presidential candidates. President Jokowi cannot run for a third term and attempts to extend his time because of the pandemic have been unsuccessful.  What then should we be looking at?

The first thing to say is expect continuity with the past. Indonesia has had two Presidents since direct democracy was re-established in 2004. Other than a short period of an open trade regime in President Susilo Bambang Yudhoyono’s first term (2004-2009), Indonesia’s economic policies have begun to be less market-driven and more top down and protectionist in their design. Violating agreements such as the WTO (a current cases has to do with its nickel export ban) while negotiating free trade deals is now the norm. Its foreign policy remains independent and nonaligned with major powers. This pattern will likely continue no matter who is elected. But, perhaps one or more candidates may challenge the current level of economic protection and Indonesia’s economic engagements with Russia and China.

Secondly, Indonesia will continue to look for regional support to better its terms of trade, while maintaining relations with its established western partners. Whether its lowering trade barriers within ASEAN while raising them with the EU and the US or trying to do international transactions without using the US$, Indonesia may confound its European and American partners as it seeks more trade and investment from them. It is unlikely any candidate will challenge the uneconomic assumptions of export bans and local content requirements. Nationalism will be the currency of the day. Just this week Indonesia announced an export ban on LNG and import ban on garlic.

Third, with only one of Indonesia 9 largest political parties, PDI-P, meeting the threshold to nominate its own candidates outright, coalition building remains the order of the day. With a weak campaign financing system, it’s often the candidates themselves and their success teams rather than the parties themselves that call the shots. Currently a rather pronounced “churn” of meetings is taking place not just among the parties themselves but also potential candidates meeting with multiple parties. This swirl of activity confuses many Indonesians, and, even more, we on the outside.

To help us get a handle on Indonesia’s complex political process, I’ve asked a stellar group of seasoned observers to gather on June 13 for a webinar: “Indonesia’s 2024 Elections: A Change in Direction or More of the Same”.