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In this briefing:
- Global Capital Flows Show China’s Collapsing Export Markets Could Soon Revive
- Japan – Chinese Flu
- Widodo Leads 59-31 / IA-Cepa Holds Promise / Online Permitting Progresses / Rights Activist Arrested
1. Global Capital Flows Show China’s Collapsing Export Markets Could Soon Revive
- Capital flows are strongly Granger causal
- Gross capital flows lead World shipping activity by 4 months
- Capital flows have been slowly rising since June 2018: in February they jumped
- Reinforces out pro-Asia and pro-China investment message
2. Japan – Chinese Flu
By Konstantinos Venetis, Senior Economist
- Japan skirts recession but near-term prospects remain weak
- Deflationary headwinds to persist in H1, threatening business spending
- Recovery likely in late 2019 as world trade finds a firmer footing
3. Widodo Leads 59-31 / IA-Cepa Holds Promise / Online Permitting Progresses / Rights Activist Arrested
A credible poll — the first new trustworthy data in a month — shows Widodo having expanded his lead to 59 percent, versus 31 percent for Prabowo. The latter’s prospects are dim. Indonesia’s Comprehensive Partnership (Cepa) with Australia will bring myriad import prices down — although, contrary to a spate of international press reports, it does not raise ownership ceilings for Australian investors. A senior activist with Amnesty International Indonesia suffered arrest for critizing the military’s plan to place hundreds of active officers in civilian posts. The BKPM’s OSS system for online permiting is making progress, although its smooth functioning remains a distanct prospect.
Politics: President Joko Widodo proposed monthly income support for graduates of vocational programs who lack immediate employment and need to search for jobs. He did not specify an amount per recipient. The proposal has some merit – but simple regulatory changes to facilitate investment and job‑creation would obviate its need. Politically, the concept will likely prove popular, further boosting Widodo (Page 2). A prominent Partai Demokrat official, Andi Arief, left the party to undergo drug rehabilitation. This marks yet another blow for a party that had been Indonesia’s largest only five years ago (p. 3). A human rights activist and lecturer suffered arrest for allegedly defaming the military (p. 4).
Surveys: In the first new poll data to emerge in over a month, the Survey Network (LSI) showed that, as of late February, nationwide support for Widodo stood at 59 percent, versus 31 percent for Gerindra Chair Prabowo Subianto. The findings, which are credible, suggest that Widodo strengthened during February, perhaps due to the two televised debates – and despite Prabowo’s emphatic attempts to provoke various economic fears. The data portray Prabowo’s prospects as distinctly remote. A Widodo landslide would further reduce the likelihood of disruption or unrest, as Prabowo‑camp claims of fraud or manipulation would lack credence. Meanwhile, Widodo would emerge with an unequivocal mandate and particularly strong political capital. Parties that defy him would jeopardize their own image. But whether he would use this strength effectively is questionable (p. 5). Findings from Polmark, a somewhat obscure firm employed by the National Mandate Party (Pan), claim that Widodo’s margin over Prabowo is only 15 percentage points – but the poll is old, it has a large error margin and it featured a 34 percent level of undecided respondents. As a percentage of decided respondents, Widodo’s support is comparable to other (and better) polls (p. 6).
Justice: In the first verdicts in Lippo’s Meikarta scandal, four Lippo personnel including Billy Sindoro received sentences ranging from 1.5‑3.5 years each. This is Sindoro’s second conviction from the Anti-Corruption Commission (KPK) (p. 8).
Policy News: A new phase of implementation is underway for online permitting (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: <[email protected]>. |
International: During an election that features strident economic critiques, the government concluded the Comprehensive Economic Partnership with Australia (IA‑Cepa). Parties may yet posture when it comes due for ratification, but other trade agreements have managed to pass. The IA-Cepa reduces tariffs on myriad Australian goods from five percent to zero, while higher tariffs on certain foods will fall precipitously. Contrary to reports, it sets no new foreign ownership ceilings (p. 8).
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