Indonesia Political Risk Analyst

Kevin O’Rourke

Reformasi

Cross Asset Strategy

Hardline Islamic groups achieved a show of force by turning out 1 million supporters for the '212 Reunion' in Jakarta; this elevates the influence of Rizieq Shihab's FPI, in particular, with adverse implications for policymaking.  Papuan separatists executed 16 construction workers in a remote highland area.  Prabowo vented groundless fury at the press.  Tax revenue is up 18% yoy, containing the fiscal deficit, and a trial of an LRT segment is due in April.Politics: The 2 December ‘Reunion’ of hardline Islamic groups was a dramatic show of force.  The turnout approximated one million, exceeding expectations of the organizers and surpassing the original December 2016 event.  Vast numbers arrived despite lacking any clear and pressing reason to demonstrate.  Gerindra Chair Prabowo Subianto spoke, but only for five minutes, and participants refrained from overt campaigning.  In effect, the Reunion empowered organizing groups that include the Islamic Defenders Front (FPI) and the Islamic Community’s Forum (FUI), by demonstrating that they have the ability to mobilize numbers that can incapacitate the capital on relatively short notice.  Policymakers are likely to show even more deference to such groups in future, with inevitably adverse consequences for the quality of policymaking and Indonesia’s image (Page 2).  Prabowo issued a scathing – and unfounded – denunciation of the press and the journalistic profession as a whole (p. 5).  In the aftermath of the 2 December Reunion, police charges against a notorious FPI cleric, Bahar Smith, will test the resolve of the judiciary (p. 6). Security: Armed violence has long been chronic in Papua, but a massacre of 16 construction workers on a state project sets new precedents.  The episode jeopardizes the president’s vision of improved peace and prosperity in the province (p. 8). Justice: The trial of PT Nusa Konstruksi Enjiniring (NKE) for corruption could affect either presidential ticket, depending on what revelations might emerge (p. 9).<table class="table table-striped"><tbody><tr><td>Produced since 2003, the Reformasi Weekly Review provides timely, relevant and independent analysis on Indonesian political and policy news.  The writer is Kevin O’Rourke, author of the book Reformasi.  For subscription info please contact: &lt;kevin.orourke@reformasi.info&gt;.</td></tr></tbody></table>Policy News: The president issued another implementing regulation for the 2014 State Civil Apparatus (ASN) Law.  But whether the measure furthers bureaucratic professionalism remains to be seen (p. 14).  The government disbursed funds for the Social Welfare Insurance Agency (BPJS) (p. 15).Infrastructure: A test run along the Cibubur‑Cawang segment of the Jakarta‑area Light Rail Train (LRT) is due in April – on the eve of the election (p. 15).Appointments: Former Pertamina Chief Director Dwi Soetjipto takes over the Upstream Regulatory Agency (SKK Migas).  This holds potential for improving regulatory decision‑making, but seems unlikely to alter Energy Ministry policies (p. 16).Economics: State revenues are registering robust growth, which promises to keep the fiscal deficit in check relative to GDP (p. 17).

Hardline Islamic groups achieved a show of force by turning out 1 million supporters for the '212 Reunion' in Jakarta; this elevates the influence of Rizieq Shihab's FPI, in particular, with adverse implications for policymaking.  Papuan separatists executed 16 construction workers in a remote highland area.  Prabowo vented groundless fury at the press.  Tax revenue is up 18% yoy, containing the fiscal deficit, and a trial of an LRT segment is due in April.Politics: The 2 December ‘Reunion’ of hardline Islamic groups was a dramatic show of force.  The turnout approximated one million, exceeding expectations of the organizers and surpassing the original December 2016 event.  Vast numbers arrived despite lacking any clear and pressing reason to demonstrate.  Gerindra Chair Prabowo Subianto spoke, but only for five minutes, and participants refrained from overt campaigning.  In effect, the Reunion empowered organizing groups that include the Islamic Defenders Front (FPI) and the Islamic Community’s Forum (FUI), by demonstrating that they have the ability to mobilize numbers that can incapacitate the capital on relatively short notice.  Policymakers are likely to show even more deference to such groups in future, with inevitably adverse consequences for the quality of policymaking and Indonesia’s image (Page 2).  Prabowo issued a scathing – and unfounded – denunciation of the press and the journalistic profession as a whole (p. 5).  In the aftermath of the 2 December Reunion, police charges against a notorious FPI cleric, Bahar Smith, will test the resolve of the judiciary (p. 6). Security: Armed violence has long been chronic in Papua, but a massacre of 16 construction workers on a state project sets new precedents.  The episode jeopardizes the president’s vision of improved peace and prosperity in the province (p. 8). Justice: The trial of PT Nusa Konstruksi Enjiniring (NKE) for corruption could affect either presidential ticket, depending on what revelations might emerge (p. 9).Produced since 2003, the Reformasi Weekly Review provides timely, relevant and independent analysis on Indonesian political and policy news.  The writer is Kevin O’Rourke, author of the book Reformasi.  For subscription info please contact: &lt;kevin.orourke@reformasi.info&gt;.Policy News: The president issued another implementing regulation for the 2014 State Civil Apparatus (ASN) Law.  But whether the measure furthers bureaucratic professionalism remains to be seen (p. 14).  The government disbursed funds for the Social Welfare Insurance Agency (BPJS) (p. 15).Infrastructure: A test run along the Cibubur‑Cawang segment of the Jakarta‑area Light Rail Train (LRT) is due in April – on the eve of the election (p. 15).Appointments: Former Pertamina Chief Director Dwi Soetjipto takes over the Upstream Regulatory Agency (SKK Migas).  This holds potential for improving regulatory decision‑making, but seems unlikely to alter Energy Ministry policies (p. 16).Economics: State revenues are registering robust growth, which promises to keep the fiscal deficit in check relative to GDP (p. 17).

'212' Demo Lifts Hardline FPI / Papua Massacre / Strong Tax Receipts / Prabowo Vs Press / LRT Trial

Parliamentarians support the environment minister's strict curbs on riverine tailings disposal, which blocks bank financing for the nationalization targeted for December; delays may ensue.  Prabowo denounced the 'economics of stupidity', but without advancing solutions capable of switching allegiance from Widodo.  In a case with potential election implications, a firm that featured Prabowo's running mate as a commissioner is itself on trial for corruption. Politics: Gerindra Chair Prabowo Subianto visited a conservative Islamic organization and denounced what he terms the “economics of stupidity”.  He reiterated his condemnation of foreign debt and private investment in resources.  The moves show that he continues to associate himself with Islamic groups beyond the mainstream, while putting forth economic critiques that may miss the mark (Page 2). Justice: Charges from Anti-Corruption Commission (KPK) prosecutors in the Riau‑1 power plant case allege that BlackGold shareholder Johannes Kotjo arranged share‑splits from the proceeds of markups (p. 5).  Two executives from the Lippo property group, Billy and Eddy Sindoro, are in KPK custody in different cases.  Billy allegedly bribed officials in Bekasi for permits for the grandiose Meikarta development, and the Bekasi District Chief is among those arrested (p. 6).  KPK prosecutors commenced the trial of a company, PT Nusa Konstruksi Enjiniring (NKE), in which Sandiaga Uno was commissioner (p. 7). Policy News: In the nationalization of the giant copper and gold mine of PT Freeport Indonesia (PTFI), an impasse is brewing over the handling of tailings, or mine waste.  PTFI has said that new regulations, issued by the environment and forestry minister in April, are impossible to fulfill.  And the head of state‑owned PT Inalum, which intends to purchase 51 percent, says that banks will not provide financing without a “resolution to the environmental issue”.  Nonetheless, the minister has not wavered and parliamentarians are critical of PTFI.  The president targets year‑end for executing the transaction, but more delays are possible before the shares change hands (p. 8). <table class="table table-striped"><tbody><tr><td>Produced since 2003, the Reformasi Weekly Review provides timely, relevant and independent analysis on Indonesian political and policy news.  The writer is Kevin O’Rourke, author of the book Reformasi.  For subscription info please contact: &lt;kevin.orourke@reformasi.info&gt;.</td></tr></tbody></table>Infrastructure: The Jakarta Light Rail Train (LRT) faces delays as central government officials blame the provincial administration for sloth.  But land acquisition in Setiabudi may be making belated progress (p. 10). Economics: The labor minister hiked the minimum wage guideline by eight percent.  This outstrips inflation, but currency depreciation offsets the impact for exporters (p. 10). Outlook: Three trends in particular can affect the presidential race – the impact of Ma’ruf Amin as the president’s running mate, the economy, and how Prabowo capitalizes on opportunities to weaken Widodo.  But only in the event of a severe crisis will voter disenchantment be sufficient for Prabowo.  Anti‑establishment sentiment witnessed elsewhere exists in Indonesia, but it does not focus on Widodo – and Prabowo is too elitist himself to channel it (p. 11).

Parliamentarians support the environment minister's strict curbs on riverine tailings disposal, which blocks bank financing for the nationalization targeted for December; delays may ensue.  Prabowo denounced the 'economics of stupidity', but without advancing solutions capable of switching allegiance from Widodo.  In a case with potential election implications, a firm that featured Prabowo's running mate as a commissioner is itself on trial for corruption. Politics: Gerindra Chair Prabowo Subianto visited a conservative Islamic organization and denounced what he terms the “economics of stupidity”.  He reiterated his condemnation of foreign debt and private investment in resources.  The moves show that he continues to associate himself with Islamic groups beyond the mainstream, while putting forth economic critiques that may miss the mark (Page 2). Justice: Charges from Anti-Corruption Commission (KPK) prosecutors in the Riau‑1 power plant case allege that BlackGold shareholder Johannes Kotjo arranged share‑splits from the proceeds of markups (p. 5).  Two executives from the Lippo property group, Billy and Eddy Sindoro, are in KPK custody in different cases.  Billy allegedly bribed officials in Bekasi for permits for the grandiose Meikarta development, and the Bekasi District Chief is among those arrested (p. 6).  KPK prosecutors commenced the trial of a company, PT Nusa Konstruksi Enjiniring (NKE), in which Sandiaga Uno was commissioner (p. 7). Policy News: In the nationalization of the giant copper and gold mine of PT Freeport Indonesia (PTFI), an impasse is brewing over the handling of tailings, or mine waste.  PTFI has said that new regulations, issued by the environment and forestry minister in April, are impossible to fulfill.  And the head of state‑owned PT Inalum, which intends to purchase 51 percent, says that banks will not provide financing without a “resolution to the environmental issue”.  Nonetheless, the minister has not wavered and parliamentarians are critical of PTFI.  The president targets year‑end for executing the transaction, but more delays are possible before the shares change hands (p. 8). Produced since 2003, the Reformasi Weekly Review provides timely, relevant and independent analysis on Indonesian political and policy news.  The writer is Kevin O’Rourke, author of the book Reformasi.  For subscription info please contact: &lt;kevin.orourke@reformasi.info&gt;.Infrastructure: The Jakarta Light Rail Train (LRT) faces delays as central government officials blame the provincial administration for sloth.  But land acquisition in Setiabudi may be making belated progress (p. 10). Economics: The labor minister hiked the minimum wage guideline by eight percent.  This outstrips inflation, but currency depreciation offsets the impact for exporters (p. 10). Outlook: Three trends in particular can affect the presidential race – the impact of Ma’ruf Amin as the president’s running mate, the economy, and how Prabowo capitalizes on opportunities to weaken Widodo.  But only in the event of a severe crisis will voter disenchantment be sufficient for Prabowo.  Anti‑establishment sentiment witnessed elsewhere exists in Indonesia, but it does not focus on Widodo – and Prabowo is too elitist himself to channel it (p. 11). 

Indonesia Politics: Freeport Tailings Impasse Looms; Prabowo Mocks Economy; Uno-Linked Firm on Trial

Indonesia

PT Nusa Konstruksi Enjiniring Tbk provides construction services.

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Nusa Konstruksi Enjiniring (DGIK IJ)

'212' Demo Lifts Hardline FPI / Papua Massacre / Strong Tax Receipts / Prabowo Vs Press / LRT Trial

Hardline Islamic groups achieved a show of force by turning out 1 million supporters for the '212 Reunion' in Jakarta; this elevates the influence...

Kevin O’Rourke

Indonesia Politics: Freeport Tailings Impasse Looms; Prabowo Mocks Economy; Uno-Linked Firm on Trial

Parliamentarians support the environment minister's strict curbs on riverine tailings disposal, which blocks bank financing for the nationalization...

Kevin O’Rourke

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