The New Year's Week that Was in ASEAN@Smartkarma - Indo Pharma, Industrials, and Weaker Oil

Indonesian Politics Weekly: Uno Under Scrutiny; Amin Holds Forth; Macro Strains; Uncertainties Loom

Indonesia Political Risk Analyst

Kevin O’Rourke

Reformasi

Cross Asset Strategy

Relatively benign inflation benefits Widodo as the 17 April election approaches, but a succession of scandals in ministries threatens to weaken his image for clean governance.  Prabowo is suffering embarassment from a proposal for a Koran-reading contest (he is illiterate in Arabic) -- while Widodo's readiness to take part sets a negative precedent for upholding  pluralism.  Indrawati is The Banker's 2019 Finance Minister of the Year, despite the problematic investment climate.  Revenue collection was strong in 2018, suppressing the fiscal deficit to 1.8% of GDP. Politics: Hard‑line Islamic backers of Gerindra Chair Prabowo Subianto risked appearing hypocritical when Acehnese clerics proposed a Koran‑reading contest for presidential contenders.  The foreign‑educated Prabowo is apparently unable to read Arabic, and he rejects the contest.  In contrast, campaign aides to President Joko Widodo gleefully agreed to it, perceiving an opportunity to impugn Prabowo’s religious credentials Widodo himself is non-committal, but the stance of his campaign officials serves, in effect, to legitimize the Acehnese practice of requiring that leaders be literate in Arabic.  The president and his advisors are again willing to sacrifice principles of pluralism to make perceived campaign gains (Page 2).  Authorities debunked a claim from a Partai Demokrat official that a voting‑fraud conspiracy is underway.  The episode reflects poorly on a prominent Demokrat vice secretary general, Andi Arief – but, for the pro‑Prabowo alli­ance, it deflects critical press attention from Prabowo’s Koran‑reading predicament (p. 3).  In a speech in Jakarta, Prabowo reiterated dire environmental warnings (p. 5).  Finance Minister Sri Mulyani Indrawati is The Banker’s 2019 Finance Minister of the Year (p. 5). Disasters: The Sunda Straits tsunami, triggered by the eruption of Anak Krakatau Volcano, caused 437 fatalities on 22 December (p. 6). Justice: For the third time in six months, a ministry faces investigation from the Anti‑Corruption Commission (KPK).  Unseemly revelations affect the Public Works Ministry, as investigators believe that kickbacks occurred on the procurement of water pipes for disaster relief in Palu.  Corruption in disaster relief is potentially subject to capital punishment.  The succession of ministerial‑level scandals risks jeopardizing Widodo’s crucial image for clean governance (p. 7).  The sentence for PT Nusa Konstruksi Enginiring Tbk (NKE) fell short of what prosecutors sought (p. 7). Policy News: At last, the administration is invoking new reformist rules on managing the civil service, by dismissing 480 personnel convicted of corruption.  A joint ministerial decree on the matter shows welcome attention to issues of institutional dysfunctions (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>Economics: Fueled by commodity prices, state revenues attained 100 percent of the budget target in 2018, while spending reached 97 percent – producing a deficit equivalent to 1.8 percent of GDP (p. 10).  Inflation was low again in December, resulting in a 3.1 percent annual rate for 2018 (p. 11). Jakarta: The odd‑even license‑plate restrictions on traffic will remain in effect for at least another three months (p. 13).

Relatively benign inflation benefits Widodo as the 17 April election approaches, but a succession of scandals in ministries threatens to weaken his image for clean governance.  Prabowo is suffering embarassment from a proposal for a Koran-reading contest (he is illiterate in Arabic) -- while Widodo's readiness to take part sets a negative precedent for upholding  pluralism.  Indrawati is The Banker's 2019 Finance Minister of the Year, despite the problematic investment climate.  Revenue collection was strong in 2018, suppressing the fiscal deficit to 1.8% of GDP. Politics: Hard‑line Islamic backers of Gerindra Chair Prabowo Subianto risked appearing hypocritical when Acehnese clerics proposed a Koran‑reading contest for presidential contenders.  The foreign‑educated Prabowo is apparently unable to read Arabic, and he rejects the contest.  In contrast, campaign aides to President Joko Widodo gleefully agreed to it, perceiving an opportunity to impugn Prabowo’s religious credentials Widodo himself is non-committal, but the stance of his campaign officials serves, in effect, to legitimize the Acehnese practice of requiring that leaders be literate in Arabic.  The president and his advisors are again willing to sacrifice principles of pluralism to make perceived campaign gains (Page 2).  Authorities debunked a claim from a Partai Demokrat official that a voting‑fraud conspiracy is underway.  The episode reflects poorly on a prominent Demokrat vice secretary general, Andi Arief – but, for the pro‑Prabowo alli­ance, it deflects critical press attention from Prabowo’s Koran‑reading predicament (p. 3).  In a speech in Jakarta, Prabowo reiterated dire environmental warnings (p. 5).  Finance Minister Sri Mulyani Indrawati is The Banker’s 2019 Finance Minister of the Year (p. 5). Disasters: The Sunda Straits tsunami, triggered by the eruption of Anak Krakatau Volcano, caused 437 fatalities on 22 December (p. 6). Justice: For the third time in six months, a ministry faces investigation from the Anti‑Corruption Commission (KPK).  Unseemly revelations affect the Public Works Ministry, as investigators believe that kickbacks occurred on the procurement of water pipes for disaster relief in Palu.  Corruption in disaster relief is potentially subject to capital punishment.  The succession of ministerial‑level scandals risks jeopardizing Widodo’s crucial image for clean governance (p. 7).  The sentence for PT Nusa Konstruksi Enginiring Tbk (NKE) fell short of what prosecutors sought (p. 7). Policy News: At last, the administration is invoking new reformist rules on managing the civil service, by dismissing 480 personnel convicted of corruption.  A joint ministerial decree on the matter shows welcome attention to issues of institutional dysfunctions (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;.Economics: Fueled by commodity prices, state revenues attained 100 percent of the budget target in 2018, while spending reached 97 percent – producing a deficit equivalent to 1.8 percent of GDP (p. 10).  Inflation was low again in December, resulting in a 3.1 percent annual rate for 2018 (p. 11). Jakarta: The odd‑even license‑plate restrictions on traffic will remain in effect for at least another three months (p. 13). 

Strong Revenues / Benign CPI / Indrawati's Award / Prabowo's Arabic / Scandals Mount / Tsunami Toll