Hting the tide
impediments. Nevertheless, it is imperative that Jakarta take steps to expand foreign investment to improve the productive capacity of the country, thus averting an overheating of the economy and a balance of payments crisis.
Unfortunately, some local analysts are questioning whether President Widodo will stay the course. Presidential elections are scheduled for April 19, 2019, and he will surely run again. Ahead of the elections, he reprogrammed US$20 billion of infrastructure projects into social spending, thus moving on to a more populist approach. These measures will help consolidate the double-digit lead he enjoys against his traditional rival, former General Prabowo Subianto – who he narrowly defeated in 2014.
Like other emerging market countries, Indonesians have grown tired of corruption. Fortunately, President Widodo has averted being entangled in any major scandal. At the same time, his government has worked hard to clean up the government.
The general election commission, the KPU, is trying to bar convicted lawmakers from holding office. This was done, despite a law that was passed in February providing members of congress with immunity from corruption charges.
President Widodo’s quest to clean up the country is one of the reasons why he continues to receive widespread support, despite not being able to deliver on some of his campaign promises.
Still, Indonesia has a tough row to hoe. The ongoing rise in global interest rates is siphoning capital out of the emerging markets, forcing central banks to intervene to stabilise their currencies and raise interest rates.
This will surely lead to higher inflation and a weaker economy. Unfortunately, there is little that governments can do to stem the tide of global monetary movements.