April 11th 2019

What would a Subianto presidency mean for Indonesia?

As the final week of the election campaign period rages on, speculation remains high over who will come away with the presidency in the two-horse race on April 17th. The Economist Intelligence Unit's core forecast is that the incumbent president, Joko Widodo (known as Jokowi), will win a second term, but the contest will be close. In this article we explore the likelihood of Jokowi's opponent, Prabowo Subianto, winning the election. We discuss the factors that support his candidacy, as well as his key disadvantages. We also lay out the likely policy and economic outlook under his administration.

Jokowi and Mr Subianto will contest the presidency for the second time. In 2014 Jokowi won the presidential election with 53.1% of the vote, compared to 46.9% for Mr Subianto (a margin of 8.4m votes). A majority of the pre-election polls continue to suggest that Jokowi will win by a wider margin this time round, but there are some risks that could undermine this lead on polling day:

  • Minority groups are abstaining from the elections. Over the course of his first term, Jokowi has alienated many of his liberal voters who are looking for improved ethnic and religious tolerance, as well as a better human rights record for Indonesia. Jokowi has performed poorly so far in these areas, with both religious conservatism and human rights transgressions in peripheral provinces on the rise. As a show of disappointment, 32 groups representing wide-ranging minority interests have reacted by urging their supporters to withhold their votes. This effort has also gained significant traction among young voters; the movement, known as #SayaGolput, has almost 2m followers on social media. However, while being disappointed in Jokowi's administration, the groups remain sceptical about Mr Subianto's ability to deliver on their interests.
  • Mr Subianto may ride high on his "strongman" personality. Indonesia's presidential elections tend to be fought along the lines of a popularity contest, and ultimately the personalities of the candidates matter hugely. In the 2014 race Jokowi won on the merit of his "clean" personality and the fact that he represented the anti-establishment voice, having come from a humble background. This time around he will have lost some of that tailwind, being no longer seen as the newcomer pressing for reform. In the meantime, Mr Subianto, a former three-star general, has mostly retained his strongman personality and is seen by his supporters as a leader who will be able to deliver on his promises. This could ultimately tip the scale on polling day, especially given that Jokowi appears to have lost his edge over minority groups.
  • Nationalism may win out. By and large, nationalistic policies tend to be popular ahead of elections in Indonesia. Mr Subianto has tried to portray Jokowi as unpatriotic in his determination to attract more foreign capital to fund domestic infrastructure. Moreover, the Subianto campaign has also tried to leverage traditionally anti-Chinese sentiment by suggesting that Chinese investments in Indonesia have been undertaken on unfair terms. Most of  Mr Subianto's campaign is deeply nationalistic and favours local small businesses—a platform that generally appeals to a majority of voters. In practice, he would struggle to implement his platform, and it is likely that only a narrow section of the country's elite would benefit from his protectionism.

Mr Subianto for president?

If Mr Subianto were to cause an upset, a stark change of style and policy should be expected. A more assertive stance on international relations would also be likely. He has pledged to review China-backed infrastructure projects, such as the Rp80trn (US$5.6bn) high-speed rail link between Jakarta, the capital, and Bandung, the largest city in neighbouring West Java province. He wants to raise defence spending and establish more military assets in frontier territories; already a deeply unpopular issue in these regions, this could spark violent protests. 

Mr Subianto's manifesto, entitled "Fair and Prosperous Together", contains a swathe of promises for reform of the bureaucracy and the quicker construction of strategic infrastructure and energy projects (not unlike that of Jokowi). He has called for Indonesia to become a major player in biofuels, while pledging to rehabilitate millions of hectares of degraded land. He will carry over the Jokowi administration's unrealised goal of food self-sufficiency and also wants his government to administer the prices of raw commodities. 

For the purpose of capturing sufficient rural support—something he lacked in 2014—he plans to establish a state bank for farmers and fishermen and to create a government fund to subsidise Islamic pilgrimages. He has also sought to win over formal sector workers with pledges to ban outsourcing, to raise personal income tax thresholds and to improve the terms of workers' pension contributions. However, these employees form a minority of the workforce. He has used some populist pledges on the campaign trail, such as curbing the number of foreign workers and criticising Jokowi for importing food commodities.

It should be noted that many of Mr Subianto's pledges will prove to be expensive for Indonesia. The populous country continues to carry one of the lowest tax/GDP ratios in South-east Asia and is therefore largely dependent on foreign capital. The country also has a constitutionally mandated fiscal deficit cap equivalent to 3% of GDP. Any government that breaches this must resign; previous administrations have had to cut back on essential spending in order to meet the requirement. The Jokowi administration has managed to keep the deficit under 2% of GDP even while implementing an expansionary pre-election budget. This kind of responsible fiscal management would be less likely under Mr Subianto. Therefore, even though Indonesians are likely to feel richer in the short term if Mr Subianto becomes president, his administration would sink the archipelago back into macroeconomic instability over the course of its tenure.

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