Incumbent has less need to pander

On a positive note, given Jokowi is in his final term he should have less of a need to pander to his political backers and can appoint capable ministers to help him run the country. Hence, we should expect similar rational economic policies over the next few years as we have seen in the past - especially in 2018, when the rupiah was depreciating.

The flip side of his victory is that it might be difficult to push through major reforms, such as free trade agreements which require the approval of parliament - it is unclear if Jokowi has the political capital to rally his allies since everybody already has their eyes set on the next presidential elections.

Major changes unlikely

Based on initial results, most parties have maintained their share of parliamentary seats - except Golkar, which continues to lose ground. As a much weaker party, Golkar might not be a partner that Jokowi can depend on to push through policy reforms. In fact, Golkar might even choose to break from the status quo to improve its standing with Indonesians.

At this early stage, I do not foresee major changes for Indonesia. The country is unlikely to take a major leap forward given that much needed structural reforms will probably not materialise. However, it is not all bad as the country will inevitably benefit from the infrastructure built up in the past few years.

Peck Lim Tan

Peck Lim Tan

Investment Analyst