Joko “Jokowi” Widodo has been officially credited with winning the Indonesian presidential election but business, the markets and foreign investors might have to wait a bit longer for clarity.
The margin of victory, 53.15%-46.85%, was even wider than analysts and poll watchers had anticipated, providing the Jokowi-Kalla ticket with a clear mandate to push through reforms.
However, Jokowi’s rival Prabowo Subianto added some last-minute intrigue to the proceedings by first disputing the results – alleging fraud in some areas of the country – and then withdrawing his candidacy.
This would technically leave only one candidate running, in a race that is already over, and would in theory be in violation of election rules.
Later in the day, Prabowo’s brother and others in his camp denied he was withdrawing; and the former general has called a press conference for Wednesday morning; hopefully to clarify the situation.
“It is indeed a bit all over the place,” Wellian Wiranto, economist, treasury research and strategy, global treasury at Oversea-Chinese Banking Corporation in Singapore, told FinanceAsia.
“[Prabowo’s] initial press conference did say that [he was withdrawing]. And now the brother is saying no. For a campaign that has been run on decisive leadership, the irony is not lost,” he added.
The Jakarta Composite, which has largely priced in the political uncertainty this year, was suitably ruffled on Tuesday, rising 0.5% before falling nearly 2% and ending the day 0.85% down. The rupiah, meanwhile, weakened about 0.3% against the dollar after an equally turbulent day.
But there could be more to Prabowo’s behavior than merely sour grapes; according to a person close to the situation he could be angling to secure the best bargaining position to secure policy concessions, whether economic or political.
“It remains unclear what Prabowo's gameplan is exactly. This is especially so when he has effectively shut himself out of the constitutional court appeal channel,” Wiranto said.
Prabowo has three days to file an appeal with Indonesia's constitutional court should he wish to pursue his accusations of electoral irregularities. The court would then have until August 22 to make a ruling on the results.
However, if he withdraws his candidacy, that path is closed.
Even if Prabowo contests the result, proving there were irregularities and achieving the necessary 8 million vote swing seems highly unlikely. The race therefore looks over for the Strongman, who has ties to the political and business elite in the country.
Hard work begins
Jokowi, the self-styled modest man from humble beginnings, must therefore now step up to the plate and deliver on his promise of a fresh start for Indonesia, while creating a government that appeases a polarized country and also keeping foreign investors happy.
“Jokowi has a great mandate to lead the country,” Wijayanto Samirin (Wija), a policy adviser to Jokowi, told FinanceAsia. "Three political parties (Golkar, PPP and PD) are in discussions with the camp. I believe Jokowi will have a majority coalition at the legislative level".
However, others are not so convinced.
“The mandate [for Jokowi] is there but nonetheless he has to bear in mind nearly half of voters opted for the other side,” Wiranto said. In the next few days, he must build some sort of united front with other parties, he added.
What is clear is that the earlier Jokowi can convince Indonesians the next government will be strong, the quicker the market can take a clear direction after a year of political uncertainty.
So what now for the business climate in the country and for foreign direct investment, which is running at an average $4.4 billion per quarter since the turn of the decade.
“In his acceptance speech, Jokowi asked the farmer to go back to the farm, fishermen to go back to the sea, students to go back to their school, traders to go back to the market, the labour force to go back to the factories and staff back to the office,” Wija said.
However, he noted there was no specific message for the business community.
“Probably it will be addressed soon,” he said.
At least we have a winner.