The dawn of a new era

Amir Fareed Rahim is a public affairs and political risk specialist with KRA Group operating across South-East Asia. He says Malaysia’s economic strategy towards Indonesia must be based on complementariness and mutual respect.

QUICK count projections show that Prabowo Subianto and Gibran Rakabuming Raka are expected to win the recently concluded Indonesian presidential election, although the official results will only be released latest by 20 March 2024. This gives them an outright victory, avoiding a June run-off and also confirms what polling houses had been pointing to in the lead-up to the vote.

There will be challenges to their romping Valentine’s Day victory — winning a projected 57%-59% of the vote across a 204.8 million strong electorate — the world’s third largest democracy.

Historically however, Indonesia’s Constitutional Court (MK) has never overturned a presidential election.

Although the pro-Prabowo/Gibran parties may not win a majority in the concurrent legislative election, also going by past precedents, Indonesia’s political factions usually coalesce around the government, with only one or two parties going into opposition.

Indonesians must be praised for their peaceful elections. And while they were vanquished, the campaigns of rival tickets Anies Baswedan-Muhaimin Iskandar and Ganjar Pranowo-Mahfud MD had heart and tenacity.

A historic mandate

The 72-year-old ex-General and the 36-year-old Mayor of Solo have won a historic mandate — thanks in part to the tacit endorsement from outgoing President Joko Widodo, also popularly known as Jokowi (Gibran’s dad).

The 2024 vote was as much as a vote for continuity for the reforms and economic transformation of the Jokowi era as it was for Prabowo and Gibran personally or their “gemoy” (“cute”) social media personalities.

It was a vote for a “Golden Indonesia”, not only because voters feel that the management of the country’s upcoming demographic bonus — its population aged 15-64 (ie the “productive age”) will account for more than 60% of its total population (now around 275 million) in 2030-2040 — is best left in the hands of Prabowo-Gibran.

February 14 was also a vote for the renewed confidence and national pride that the Jokowi years fostered in Indonesia. The country takes the shape of the eye of the beholder, but no one can deny that the outcome was an emphatic vote for continuity.

So, what will a Prabowo victory mean? Here are five takes.

Continuity, but personalities matter

Firstly, while it’s premature to assume what his policies are, the consensus seems to be that Prabowo, based on his campaign pledges, will continue most of Jokowi’s polices. We will likely see the maintenance of Jokowi’s efforts at policy consistency and legal certainty.

The hallmarks of the previous years — of building physical infrastructure, a digital ecosystem and pro-investment stances but with the national interests first — will continue. This will be balanced with attending to the basic needs of people such as addressing maternal health and childhood stunting.

But here’s my second take: Even in continuity personalities matter. Ebullient Prabowo is of course a different man compared to soft-spoken Jokowi. But both have strong personalities. So does Gibran, for that matter — who has not necessarily been deferential to his father in the past.

As such, one key thing to watch is the transition: The dynamics between incoming President and VP, as well as the outgoing head of state.

What role will Prabowo accord to Gibran given that there are no formal powers associated with the Indonesian Vice-Presidency beyond what the President decides? How much influence will Jokowi have over the new government — and in what shape?

Jokowi was successful in bringing different forces together. The personal relationship between all three men will influence not only how the Cabinet is formed but how functional it will be.

They will need to show unity and work to rebuild the Jokowi coalition that went separate ways in 2024 — especially former President Megawati Soekarnoputri’s Indonesia Democratic Party of Struggle (PDI-P, which will likely still be the largest in the DPR parliament).

Politics aside, the new administration must realise that their landslide was obtained on the expectation that they would perform on par or better than their predecessors. This will especially be the case for Indonesia’s Millennial and Generation-Z voters, who backed Prabowo-Gibran overwhelmingly (a Kompas newspaper exit poll suggested that 65.9% of electors aged under 26 voted for them).

Also, Prabowo will have to address the controversies over his military career and his relative lack of executive experience by naming a credible economic team — something investors will be looking very closely at.

Nationalism is Indonesia’s default setting

Thirdly, nationalism is Indonesia’s default setting. The push for local ownership and content, as well as the downstreaming of the natural resources industry that Jokowi championed will be things that any government of the republic would adopt.

There’s no use fretting over economic nationalism or rhetoric, real or imagined. Indonesia — which could emerge as the world’s 4th largest economy by 2045 — must be taken on its own terms.

Rather, judge Indonesia on its fundamentals and the policies of the government — which thus far, at its core, has been consistently pro-business.

Presence is key

Fourthly, political risk can be mitigated by boots on the ground. Success in Indonesia cannot be secured remotely. Actual face time, engagement and presence are essential.

For Malaysia, we should never take our ties with Indonesia for granted. Yes, in many ways our companies have had first mover advantage in the republic (we invested US$3.3 billion or RM15.8bil in 2022 alone), including in key projects like the Nusantara new capital.

Yes, Prabowo has long-standing ties with many senior Malaysian leaders. And yes, Prabowo is a Victoria Institution boy — there’s videos going round of him singing the Malaysian school's song.

But even the best relationships need work and national interests are always at the back of everyone’s mind.

Our economic strategy towards Indonesia must be based on complementariness and mutual respect. For instance, the continuance of downstreaming could create opportunities for Malaysian companies to support the process and the supply chains created.

Also, the economic relationship isn’t just a game for the big boys. There will be opportunities for our SMEs, especially in the provinces, and so they need to be geared to be able to take advantage of them.

Towards a Golden Indonesia

Finally, Indonesia is going places no matter who is President. The perception of years past has been that the country was a recipient of investment.

That could change if its strong growth momentum will continue. Indonesia could hence become a source for investment for Malaysia moving forward — so our again, our strategy and attitudes towards it, will have to change.

Prabowo’s victory will herald a new era for Indonesia. Although much is still uncertain, the country, because of its size and its strategic location, will matter a great deal either way.

Jokowi’s era was marked by stable economic growth, albeit around 5% annually on average. As such, Prabowo’s administration will have to turbocharge growth if it is to achieve the Golden Indonesia.

This could mean very, very interesting and exciting times all round.

This article first appeared in Star Biz7 weekly edition.

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