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Parties get burned in equity rout, lose donors
With huge exposure to distressed stocks, affluent politicians from major political parties have fallen victim to the recent turmoil in the equity market, leaving their party coffers in desperate need of cash
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With huge exposure to distressed stocks, affluent politicians from major political parties have fallen victim to the recent turmoil in the equity market, leaving their party coffers in desperate need of cash.
Party donors, mostly businesspeople, look unlikely to keep investing in politics, with many gearing up for hard times next year when the impact of the global financial crisis is expected to take its toll on Indonesia.
“Parties whose financing comes from investments in stocks are suffering the most. Their campaign funds have plunged heavily,” said economist-turned-legislator Dradjad H. Wibowo of the National Mandate Party (PAN).
“Many of them put their money in stocks, hoping for quick returns to finance next year’s election campaigns. However, they all got burned.”
PAN chairman Soetrisno Bachir, for instance, has been hit with losses of Rp 3 trillion (US$300 million) from the stock market turmoil, following his heavy exposure to PT Bumi Resources, the crown jewel of the influential Bakrie family.
When contacted by The Jakarta Post over the weekend, Soetrisno refused to deny or confirm the report, saying merely that “profits and losses are very common things in business”.
The country’s stock market slumped by more than 20 percent between January and October, following jitters over the global financial crisis, with the rupiah also plummeting by around 10 percent against the U.S. dollar during the same period.
Legislator Yuddy Chrisnandi of the Golkar Party said the stock market rout had adversely impacted the party — the largest faction in the House of Representatives.
“By this time in the 2004 campaign, Golkar’s flags and symbols had been distributed. Each legislative candidate had also received a logistics subsidy from the party.
“However, I have yet to see a similar flow of logistics now. I think this has something to do with the crisis,” Yuddy said, adding the party was backed by prominent businesspeople, including Vice President Jusuf Kalla and Coordinating Minister for the People’s Welfare Aburizal Bakrie.
“The question is, though, will Aburizal keep contributing significantly to Golkar with the Bakrie Group of companies now in financial trouble? I think we can’t expect that much,” he said.
However, fellow Golkar legislator Harry Azhar Azis remained optimistic the party would receive strong backing from other businesspeople.
“Aburizal Bakrie is not the only loaded guy in Golkar. The party still has others,” he said.
The Indonesian Democratic Party of Struggle (PDI-P), the House’s second largest faction, said it would minimize advertisement spending in mass media because its main donors were having trouble running their companies during these hard times.
“It’s very normal for our party to be affected by the crisis. Some of our donors are collapsing due to the crisis,” PDI-P House faction chairman Tjahjo Kumolo said recently, adding the party would need at least Rp 300 billion for campaign advertising.
The legislative and presidential election laws limit party donations to Rp 1 billion per person, while donations from groups are capped at Rp 5 billion.
Golkar and the PDI-P received Rp 108.28 billion and Rp 108.27 billion respectively during the 2004 legislative campaign, according to an audit by the General Elections Commission (KPU).
In the 2004 presidential campaign, Megawati Soekarnoputri and her running mate Hasyim Muzadi received Rp 105.20 billion, while President Susilo Bambang Yudhoyono and his running mate Jusuf Kalla received Rp 70.20 billion.
