Uncertainty after disputed vote
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Indonesia faces a long period of uncertainty after last week's disputed presidential election, analysts warn, raising fears for Southeast Asia's top economy as growth sits at four-year lows, foreign investment slows and corruption remains rife.
After a bitterly-fought campaign, Jakarta Governor Joko Widodo and his rival, ex-general Prabowo Subianto, both used different unofficial tallies to claim they had won on Wednesday.
The initial euphoria quickly wore off. The Jakarta stock market slumped as much as 2 per cent the following day, and was 1.3 per cent down at the close as investors grew nervous about the potential for a prolonged deadlock.
“Given the conspicuous absence of a concession, the market still cannot rid itself of the spectre of draggy uncertainty for a while more,” said economist Wellian Wiranto, from Singapore’s OCBC Bank.
Investors favour Widodo, known by his nickname Jokowi, as he is seen as a potential reformer and a clean leader in one of the world’s most corrupt countries.
Prabowo, a top military figure in the era of dictator Suharto, has struck a fiercely nationalistic tone on the campaign trail, and is looked at warily by markets.
The election commission is expected to announce the official results on July 22 but the loser may contest them in the Constitutional Court, which has until the end of August to make a ruling.
It is not a good time for Indonesia to be hit by uncertainty that could scare off investors, as it undergoes a painful transition from a decade of rapid growth fuelled by high global prices for its abundant commodities.
