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Indonesian to-be presidents take on economy

Written by Lian Jye

On July 9th is the third Presidential election in the history of Indonesia. There are only two pairs of candidates that are capable to gather sufficient national seats or national votes, 20% and 25% respectively, to stand for this coming election. Joko Widodo from PDI-P, with his running mate from Golkar, Jusuf Kalla, will be facing Prabowo Subianto from Gerindra and his running mate, Hatta Rajasa, from PAN directly.

Foreign investors are waiting anxiously for the outcome of this election. Indonesia is a huge market -demographically and geographically. Some investments and other developments are placed on hold as the results of the election may have an impact in the future of these businesses. Taiwanese OEM Foxconn, for example, is holding onto its USD 1 billion manufacturing development in Indonesia. The company is requesting for free land in Jakarta and is waiting for the next leadership to finalize this development.

By this stage of the election campaign, both sides have revealed their economic manifesto. In Jokowi-Jusuf’s manifesto, Indonesian economic independency is highlighted through system change. Agriculture business will be supported to maintain “food sovereignty“. This will be done through provision of seed until year 2019, development of basic infrastructures such as roads, dams and irrigation, and land reform. Out of the construction of these basic infrastructures, jobs will be created.

At the same time, fuel subsidies will be gradually reduced. Technology such as enhanced oil recovery (EOR) will be introduced. Investment performance for oil will be evaluated based on net present value and internal rate of return. As the pair seeks to formulate more effective and efficient governance on the oil and gas industry, commitment will be given towards the introduction of thermal heat industry. In the long run, a more market-oriented system will be formed for the trading of renewable energy under the supervision of Indonesia Bureau of Logistics (BULOG).

In contrary to Jokowi-Jusuf, the manifesto of Prabowo-Hatta places economic reform ahead of political reform. The pair is ambitious in their “Big Push Strategy“. They want to double Indonesia’s GDP per capita from the current IDR 35 million to IDR 60 million with annual economic growth above 10 percent. Job creation is aimed at 2 million per year through labour intensive processing industry and opening of new agriculture land. National spending to GDP ratio will be increased to a minimum 19% by the year 2019. However it remains unclear where the pair’s budget will come from.

At the same time, the pair aims to further improve transportation system and create special economic zone. An industrial specific financial institution, Agriculture and Fishery Bank (Bank Tani and Nelayan) will be set up to provide financial assistance. They also plan to renegotiate unfair mining contracts.

Essentially, there are a lot of similarities in both manifesto. Both sides’ strategy on human resources development have to do with compulsory twelve years education and scholarships for top performers. Both allocate substantial new lands for mining and agriculture, which are the main contributors to Indonesian economy. Interestingly, healthcare sector has been massively overlooked, especially by Jokowi-Jusuf. Health Minister Nafsiah Mboi has raised her doubts and hoped that the issue will be addressed in the presidential debates.

–Edited by Kristine Diaz