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As parliamentary vote counting continues, fractious parties build coalitions. Conservative Muslims and Suharto-era rights abusers appear poised to gain. Election violence is isolated, stocks rally, but mental health facilities brace for an influx of devastated candidates from among the 1.2 million who ran. US mining giant Newmont loses an arbitration dispute, spooking foreign investors. And Business Week stuns expats by trashing Jakarta’s posh living standards.
Top News: Although only a fraction of the votes have been counted, it appears that Indonesia’s major parties fared poorly in the April 9 parliamentary elections. The Democrats, led by President Susilo Bambang Yudhoyono, are scoring just over 20 percent. That doubles their performance in the 2004 poll, but falls short of the number needed to free the party from having to form an unstable coalition to contest the more important presidential elections in July.
A “quick count” of partial election returns shows that two other secular parties, the Democratic Party of Struggle, headed by former president Megawati Sukarnoputri, and Golkar, the former Suharto political vehicle, each garnered only 15 percent — a serious blow to both. Islamic parties also polled low. The Prosperous and Justice Party, known as PKS, Indonesia’s most successful Islamic party, only reached 7 percent.
The showing by Gerindra, the party of former president Suharto’s son-in-law, Prabowo Subianto, was abysmal despite huge amounts of spending on advertising.
Outside of election violence in the resource-rich province of Papua, where a separatist movement has simmered for decades, the election was mostly peaceful and is being seen as yet another example of Indonesia’s strengthening democracy.
Now the top-performing parties will negotiate coalitions to contest July’s presidential elections. President Yudhoyono has indicated interest in partnering yet again with Golkar and possibly the PKS, the Islamic party, though he has said he would require any party joining his coalition to support his own platform. During his first term, the reform-oriented policies of Yudhoyono have often been hampered by his partnership with Golkar, a collection of mostly Suharto-era politicians. Some are worried that could continue.
A partnership with PKS could lead to more concessions to conservative Muslims in Indonesia who seek to impose Sharia-based legislation such as the anti-pornography bill passed last year. The coming weeks will reveal just what shape these coalitions take. Megawati appears ready to partner with ex-generals Subianto and Wiranto, both of whom carry with them a tremendous amount of baggage. They are both implicated in student kidnappings and violence during East Timor’s referendum on independence.
Money: U.S.-based Newmont Mining Corp. lost an arbitration dispute with the Indonesia government April 1. The mining giant is required to divest 51 percent of its stake to local companies after five years of commercial production but had delayed the divestment over concerns of share pricing and potential buyers. Newmont had wanted to avoid being forced to sell to the powerful Bakrie Group, headed by the controversial minister of people’s welfare, Aburizal Bakrie. Experts say the dispute and subsequent verdict could scare investors from what has long been considered a risky market.
Indonesian markets across the board leapt following April 9’s peaceful election. The results helped too. Yudhoyono’s party is seen as market-friendly and has pushed through numerous reforms in recent years to encourage foreign investment.
Palm oil dropped slightly after posting major gains in the last few weeks on speculation that the worst of the economic crisis is over, joining a commodities rally led by oil and copper. The rally was good news for Indonesia, the world’s largest producer of palm oil and a commodities-driven economy. Plantation shares were up with the surge in palm oil. PT Perusahaan Perkebunan London Sumatra Indonesia, the country’s second-largest plantation stock, jumped 7.6 at the beginning of April and is showing no signs of slowing down.
That said, exports of non-commodities continue to contract here. Exports were down more than 30 percent in the first quarter and the country’s chamber of commerce predicted it would fall 50 percent in the second quarter, putting additional pressure on a $6 billion stimulus package aimed at increasing consumer spending, which now accounts for 70 percent of gross domestic product.
Tax day came and went in Indonesia. Despite the government’s best efforts, only 2 million out of 13 million registered taxpayers filed their returns on the March 31 deadline. Amazingly, the country still managed to nearly double the amount of income tax collected from individuals this year. Finance Minister Sri Mulyani Indrawati’s efforts at shaking up the country’s notoriously corrupt tax and customs department appears to have paid off.
Elsewhere: Mental hospitals around the country are taking in some of the estimated 1.5 million candidates that ran, and then lost, in the parliamentary elections April 9. At least one candidate from central Java committed suicide. In fact, the health minister ordered the country’s 32 mental hospitals to prepare for record numbers of patients ahead of the national polls. One hospital in Jakarta prepared a team of five psychiatrists, six psychologists, three social workers, two religious therapists and 10 nurses in anticipation of the problem.
Business Week ranked Jakarta the second worst place in the world to live for expats, just above Lagos, Nigeria. Expats living in Jakarta roundly rejected the report as ridiculous and recommended some of the Business Week researchers actually visit the city. The report cited the threat of religious violence as a major factor. Yet Indonesia has not had a terrorist attack since 2005 and most expats live comfortably side by side with their Muslim neighbors.