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Bickering neighbors

Malaysia and Indonesia squabble over domestic workers, textile patterns, and disputed waters. The health minister blames Australians for bringing swine flu to Bali. Indonesia's airline can fly to Europe once again. Domestic consumption fuels growth despite a steep drop in foreign investment. The president claims he's a victim of black magic. And Jakarta's traffic could come to a standstill in 10 years.


Top News: Indonesians are expected to re-elect the reform-minded incumbent Susilo Bambang Yudhoyno during presidential elections Wednesday. The Indonesian election commission called an end to official campaigning last week to allow for a “cooling off” period before the polls are held. The campaign, however, was never particularly heated.


Yudhoyono’s challengers, Megawati Sukarnoputri, whom he defeated in 2004, and Yusuf Kalla, his current vice president, made a last ditch effort to delay the vote because of irregularities in voter lists, among other things. Their claims, which were unsurprising since they lagged far behind in various surveys, haven’t received much traction. The country looks poised to hold a peaceful election — another notch in its spectacular transformation from authoritarian-rule just 10 years ago to one of the world’s largest democracies.


Malaysia is blaming the Indonesian election for stoking tensions between the two countries, which continue to squabble over everything from land to batik textiles. In the latest flare up of the rivalry, the Indonesian government stopped sending domestic workers to Malaysia because of abuse allegations. More than 300,000 maids work in Malaysia but recent reports of physical and sexual abuse at the hands of Malaysia employers has angered Indonesians. Desperate for domestic help from Indonesia, Malaysia promised to improve oversight and regulation of the industry.


It was the most recent in a long list of spats that culminated June 29 when the Malaysian minister of defense publically promised, somewhat outrageously, that the two countries would not go to war. In recent months, Indonesia and its neighbor have bickered over ownership of the batik cultural tradition, ownership of disputed waters known as Ambalat and the escape and susbsequential charges of abuse by an Indonesian starlet against her Malaysian husband, a prince.


Swine flu has finally reached Indonesia, with at least 20 more cases discovered this week, mostly on the resort island of Bali. Indonesia’s health minister, Siti Fadillah Supari, has blamed visiting Australians for bringing the pandemic to Indonesia and has demanded that all foreigners wear masks. Indonesia has long battled bird flu and is thought to be well-prepared to contain this latest outbreak.


Money: The European Union looks set to lift its two-year old ban on Garuda Airlines, Indonesia’s state carrier, this month. The EU banned all 50 Indonesian airlines from its airspace following a string of deadly crashes in 2006. Officials said that all but three of more than 120 violations found by a team of EU investigators had been resolved.


The lifting of the ban gives Garuda the green light to start planned flights to Amsterdam, Germany and several other European cities after a vast overhaul of the company in the last two years. Despite the ban, Garuda has remained profitable (a rarity in the airline world) because of strong domestic demand.


Indonesia continues to see its foreign direct investment decline because of the global economic crisis. Finance minister Sri Mulyani said overseas investment would likely drop almost 60 percent in the second half of 2009. She asserted that while the world's economies have stabilized, they have yet to actually recover, stifling investment in Indonesia.


Fortunately, domestic consumption has protected the country from the decline in foreign investment, which accounts for only about 25 percent of the country’s GDP. Indonesia’s economy continues to grow at between 4.5 percent and 5 percent.


Other than being the region’s best performing economy, Indonesia’s Rupiah has led a resurgence among Asian currencies as the global crisis eases. The Rupiah is headed for its biggest quarterly gain since 2004, riding a wave of optimism that began in April 2008 after Yudhoyono’s Democratic party trounced the polls. Yudhoyono is considered market friendly and is preferred by most foreign investors.


Elsewhere: Black magic and other mystical traditions have long played a role in Indonesian politics and this year’s elections are no different. Incumbent Yudhoyono’s birthday is thought to be the cause of the numerous natural disasters that have beset Indonesia during his first term. And now Yudhoyono himself has accused his opponents of using black magic against him during the campaign, adding that he is forced to pray for protection.


Magic seems like the only possible way Jakarta can pull off its ambitious attempt to rework the city’s master plan, which emphasizes more efficient transportation and reduced flooding. Transportation experts have said that Jakarta traffic could come to a total standstill in less than a decade unless a solution to the problem is found soon.