Indonesia’s presidential election next July will be a “critical test of the country’s resilence”, says Ben Bland in the FT. The country has made “striking economic progress”, but voters are increasingly dissatisfied with rising inequality, persistent corruption and the uneven rule of law. These issues need to be tackled before they become a risk to social stability.
Meanwhile, the helpful conditions that have lifted growth to 6% per year won’t continue indefinitely, adds Deyi Tan at Morgan Stanley: slowing Chinese demands will hurt exports that still depend heavily on commodity prices. This means “increased urgency” for economic reforms aimed at improving education and infrastructure, raising productivity and attracting foreign direct investment.
So it’s unfortunate the candidates have “failed to inspire”, says Bland, with little evidence that they are committed to change. Better contenders may yet join the race, like Joko Widodo, Jakarta’s popular governor, while “the electorate does have a history of choosing relatively reform-minded candidates”, says Tan. There are reasons to believe Indonesia’s progress will continue – but politics is a risk investors need to watch.