FSG’s Practice Leader for APAC, Adam Jarczyk, sat down with the host of CNBC’s “Squawk Box” recently to discuss developments in Indonesia’s political landscape.
Excerpts from Adam’s notes:
Will Prabowo continue to oppose Jokowi now that his appeal has been rejected?
- He may try, but it’s likely to be a futile battle. Now that Indonesia’s Constitutional Court has issued its ruling, there will be significant pressure on Prabowo’s political allies to desert him and move into Jokowi’s camp
- Unless Prabowo can hold his coalition together, it will be very difficult for him to mount a credible opposition
What is the outlook for Jokowi’s leadership and policy direction?
- The outlook for Indonesia’s next administration is broadly positive; the executives we work with have expressed quite a bit of optimism about Jokowi’s potential to cut red tape and fight graft
- Even so, deep-seated changes in a decentralized government like Indonesia’s will take time. Jokowi will be pushing for bottom-up reform in a system full of powerful vested interests. And he will be doing it with a fragmented coalition
- With this in mind, companies and investors need to maintain realistic expectations, particularly in the short term. Jokowi is trying to steer a very large ship back onto the right course, and that takes time
What is the outlook for investment from multinationals now that the elections are over?
- We expect to see more investment flow into Indonesia once the dust has settled and a new administration is in place
- The executives we work with ask for information on Indonesia more frequently than any other ASEAN country (and about as frequently as they ask for information on India), and this election is likely to reinforce that tendency
- Indonesia’s relatively smooth democratic process stands in stark contrast to the political transitions we’ve seen in some other ASEAN countries recently, and the multinational executives we speak with in the region are taking notice