Indonesian election could be decided by the economy, not religion, as Joko Widodo eyes challenger | Liputan 24 English
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Indonesian election could be decided by the economy, not religion, as Joko Widodo eyes challenger

Posted by On 4:10 AM

Indonesian election could be decided by the economy, not religion, as Joko Widodo eyes challenger

Email Indonesian election could be decided by the economy, not religion, as Joko Widodo eyes challenger

Posted September 14, 2018 04:29:17

A teller counts Indonesian rupiah at a money changer Photo: The value of the Indonesian rupiah is slipping down towards the levels of the 1998 currency collapse. (Reuters: Willy Kurniawan) Map: Indonesia

Indonesia's sliding rupiah could threaten President Joko Widodo's re-election chances, with his political rival shifting the deb ate to the economy in an attempt to expose a key weakness, analysts say.

Last month, Mr Widodo chose conservative Muslim cleric Maruf Amin as his presidential running mate, ahead of an election that was shaping up to be fought on religious grounds.

But, as the rupiah edges to lows not seen since the 1998 Indonesian currency collapse, which led to the fall of the Suharto regime, Widodo's pick for vice president is now being seen by some as a "hindrance".

"Widodo is approaching the election using the tactics of the previous war, so to speak," independent political risk analyst Kevin O'Rourke, who publishes the newsletter Reformasi Weekly, told the ABC.

"He conferred the vice presidential nomination on a very conservative Islamic cleric thinking, apparently, that he needed to guard against attacks on his religiosity.

"In fact, it seems that his opponents will be criticising him for his handling of the economy and W idodo's running mate is no help at all in that arena. In fact, he's probably a hindrance."

Last Saturday, presidential challenger Prabowo Subianto's coalition issued a statement blaming the Widodo administration for the currency slide.

Prabowo at formal registration Photo: Indonesian presidential candidate Prabowo Subianto, centre, greets his supporters after formal registration as candidate. (AP Photo: Achmad Ibrahim)

"We are gravely concerned with the endless weakening of rupiah's [sic] currency" the statement said.

"It's becoming a burden on our national economy, for the most vulnerable Indonesians in particular, who sooner or later must face rising basic commodities prices.

"Our ec onomy's fundamentals are weakening because there have been misguidances in the strategies used to propel our economic development."

Food prices the key issue for voters

The Indonesian rupiah has fallen around 9 per cent this year against the US dollar, forced downwards in part by the US decision to raise interest rates, which has seen capital flow back into America's coffers, spooking emerging markets like Turkey and Argentina.

That's made many imported goods in Indonesia more expensive, which in turn is putting upward pressure on inflation.

"Polls have showed for many years that by far the most important concern for [Indonesian] voters is inflation, especially the price of food," Mr O'Rourke said.

"If the currency continues to weaken, the price of food will go up."

Matthew Busch, Visiting Fellow at the Lowy Institute, said if food became more expensive, the President would get the blame.

"If food prices started to go up considerably, that could be a real problem," Mr Busch said.

"That is something that has moved votes in the past and has a tangible impact on the way people evaluate the President's performance."

Indonesia has already imported 2 million tonnes of rice this year, much more than usual, in an attempt to ease rising costs.

Australian Prime Minister Scott Morrison and Indonesian President Joko Widodo arrive for high tea. Photo: Scott Morrison and Joko Widodo recently signed an agreement on a long-awaited free trade deal. (AAP: Lukas Coch)

The Widodo Government has also introduced protectionist measures, including slapping tariffs of up to 10 per cent on around 1,000 imported items, from soap to electronics, to help narrow Indonesia's current-account deficit.

Just two weeks ago, Prime Minister Scott Morrison signed an agreement with Mr Widodo to conclude negotiations on a long-awaited Free Trade deal.

Hal Hill, professor of economics at the Australian National University, says much of the discussion about the Indonesian rupiah has been "overdone".

"Indonesia had one of the modern world's biggest economic crises in 97-98 when the rupiah went into freefall and the banking sector collapsed, and of course it triggered the collapse of the Suharto regime," he said.

"So, every time you get significant movements in the rupiah, people start to get a little bit edgy.

"I wouldn't expect it to become anything like the full-blown crisis Indonesia had earlier, or what looks like becoming a pretty serious crisis currently in Argentina and maybe Turkey. "

That doesn't mean President Widodo's opponents won't continue to use the currency issue to attack him.

The challenger, Mr Subianto, a former military strongman, has chosen Sandiaga Uno, a wealthy and successful businessman, as his running mate.

Mr Widodo is a popular president and is widely tipped to win the election in April, but Mr O'Rourke believes the combination of rising food prices and the two candidate's chosen running mates, could significantly narrow the gap.

"These two factors can make the presidential election contest a bit more competitive, possibly too competitive for comfort."

Topics: elections, government-and-politics, business-economics-and-finance, world-politics, indonesia

Source: Google News Network: Liputan 24 English | Berita 24 English | Warta 24 English | Netizen 24 Indonesia

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