The Week that Was in ASEAN@Smartkarma - Indonesian Consumers, Cigarettes, and Mobile World

Indonesia Political Risk Analyst

Kevin O’Rourke

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

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Judges sentenced former Pertamina head Karen Agustiawan to eight years on patently spurious charges -- indicating that mafia interests continue to manipulate legal-system institutions for narrow ends.  Prabowo urged supporters to refrain from demonstrating outside the Constitutional Court and indeed none emerged.  Yudhoyono's Partai Demokrat is making inroads with Widodo's alliance; its addition would lift the president's support in the next parliament from 61% to 70%.  Widodo called for allowing foreign airlines to operate domestically, but this seems unlikely to actually transpire.  The police chief is bungling the post-riot investigations, potentially handing a boon to Prabowo.Politics: PDI‑Perjuangan abruptly moved its party congress date forward by eight months to August of this year.  Speculation will persist that Megawati may contemplate handing the reigns to her reclusive son, Prananda Prabowo (Page 2).  Gerindra Chair Prabowo Subianto asked supporters to desist from protesting as Constitutional Court justices commence hearings on his electoral appeal today.  Significant demonstrations are not occurring (p. 3).  Prabowo’s legal team claims that Mar’uf Amin lacked eligibility to run for vice president because he served on Syariah advisory councils for subsidiaries of state‑owned Bank Mandiri and Bank Negara (BNI).  General Election Commission (KPU) members defended their decision (p. 4).  Police disclosed evidence to Tempo that links organizers of the 21‑22 May rioting with Gerindra – but the figures involved deny the account (p. 5).  Security officials persist in focusing attention on an anemic assassination plot by Kivlan Zein, rather than accounting for nine riot deaths.  Police Chief Gen Tito Karnavian rejects an independent fact­‑finding team; this risks ceding a public‑relations advantage to Prabowo (p. 6).  Former First Lady Kristiani (‘Ani’) Herawaty Yudhoyono succumbed to leukemia (p. 9).  Prabowo irked Susilo Bambang Yudhoyono by telling reporters that the late first lady voted for him twice.  The gaffe underscores the longstanding awkwardness in their relations and reinforces prospects for Yudhoyono’s Partai Demokrat to join President Joko Widodo’s alliance (p. 9).  Moreover, Yudhoyono’s two sons made a prominent holiday visit with offspring of PDI‑P Chair Megawati (p. 9).Justice: In a spurious case prosecuted by the Attorney General’s Office (AGO), judges sentenced former Pertamina head Karen Agustiawan to eight years in jail, blaming her for Pertamina’s loss of money in an overseas oil exploration project.  Agustiawan apparently made enemies who are obtaining retribution and thereby sending a signal to decision‑makers throughout the energy sector.  Persistent misuse of legal institutions for narrow ends marks a major deficiency of Widodo’s presidency (p. 10). Policy News: Press headlines said the finance minister will curb foreign work permits – but in fact she was merely restating existing policy, without signaling any change (p. 11).  The president called for foreign competition in domestic air routes, but actually bringing this about is far‑fetched (p. 12).  Pertamina’s Aramco JV is in jeopardy (p. 13). Economics: Inflation registered a strong increase during May, but a rate cut is nonetheless likely soon (p. 14).Jakarta: Deaths in the annual holiday migration (mudik) fell by 74 percent (p. 15).

Judges sentenced former Pertamina head Karen Agustiawan to eight years on patently spurious charges -- indicating that mafia interests continue to manipulate legal-system institutions for narrow ends.  Prabowo urged supporters to refrain from demonstrating outside the Constitutional Court and indeed none emerged.  Yudhoyono's Partai Demokrat is making inroads with Widodo's alliance; its addition would lift the president's support in the next parliament from 61% to 70%.  Widodo called for allowing foreign airlines to operate domestically, but this seems unlikely to actually transpire.  The police chief is bungling the post-riot investigations, potentially handing a boon to Prabowo.Politics: PDI‑Perjuangan abruptly moved its party congress date forward by eight months to August of this year.  Speculation will persist that Megawati may contemplate handing the reigns to her reclusive son, Prananda Prabowo (Page 2).  Gerindra Chair Prabowo Subianto asked supporters to desist from protesting as Constitutional Court justices commence hearings on his electoral appeal today.  Significant demonstrations are not occurring (p. 3).  Prabowo’s legal team claims that Mar’uf Amin lacked eligibility to run for vice president because he served on Syariah advisory councils for subsidiaries of state‑owned Bank Mandiri and Bank Negara (BNI).  General Election Commission (KPU) members defended their decision (p. 4).  Police disclosed evidence to Tempo that links organizers of the 21‑22 May rioting with Gerindra – but the figures involved deny the account (p. 5).  Security officials persist in focusing attention on an anemic assassination plot by Kivlan Zein, rather than accounting for nine riot deaths.  Police Chief Gen Tito Karnavian rejects an independent fact­‑finding team; this risks ceding a public‑relations advantage to Prabowo (p. 6).  Former First Lady Kristiani (‘Ani’) Herawaty Yudhoyono succumbed to leukemia (p. 9).  Prabowo irked Susilo Bambang Yudhoyono by telling reporters that the late first lady voted for him twice.  The gaffe underscores the longstanding awkwardness in their relations and reinforces prospects for Yudhoyono’s Partai Demokrat to join President Joko Widodo’s alliance (p. 9).  Moreover, Yudhoyono’s two sons made a prominent holiday visit with offspring of PDI‑P Chair Megawati (p. 9).Justice: In a spurious case prosecuted by the Attorney General’s Office (AGO), judges sentenced former Pertamina head Karen Agustiawan to eight years in jail, blaming her for Pertamina’s loss of money in an overseas oil exploration project.  Agustiawan apparently made enemies who are obtaining retribution and thereby sending a signal to decision‑makers throughout the energy sector.  Persistent misuse of legal institutions for narrow ends marks a major deficiency of Widodo’s presidency (p. 10). Policy News: Press headlines said the finance minister will curb foreign work permits – but in fact she was merely restating existing policy, without signaling any change (p. 11).  The president called for foreign competition in domestic air routes, but actually bringing this about is far‑fetched (p. 12).  Pertamina’s Aramco JV is in jeopardy (p. 13). Economics: Inflation registered a strong increase during May, but a rate cut is nonetheless likely soon (p. 14).Jakarta: Deaths in the annual holiday migration (mudik) fell by 74 percent (p. 15). 

Pertamina Case Highlights Risk / Airline Dereg Unlikely / PD Leans Widodo / No Court Demos