SBY to choose between reform and market

The Jakarta Post ,  Jakarta   |  Thu, 04/16/2009 2:16 PM  |  National

Given the lead by President Susilo Bambang Yudhoyono's Democratic Party (PD) in the April 9 legislative elections, political analysts are forecasting possible tie-ups with Islamic party allies, but have not ruled out a repeat coalition with the Golkar Party.

"A PD-Golkar coalition could lead to a slower pace of reform, although implementation of more market friendly policies is expected. On the other hand, a tie up between PD and other Islamic parties (such as the PKS) would allow SBY more liberty to fight graft and cut bureaucracy, but could lead to more sharia style policies, marginalizing secular supporters and religious minorities," political analysts with Citi Indonesia, the Indonesian arm of US-based Citi Group, said.

Although its margin of victory was not as wide as predicted by earlier polls, the Democratic Party's head start allows Yudhoyono to build a coalition from a position of strength.

"In the event that PD wins more than 20 percent of seats in the House or 25 percent of national votes, SBY can be nominated as its presidential candidate without outside support. A strong PD win would subsequently give SBY more options to choose his VP and improve his ability to attract coalition partners, enabling him to enact measures to revive economic growth. Indeed, preliminary results seem to indicate voters' approval of SBY's rule, which has delivered strong economic growth, peace, and stability in the country," the analysts said.

With preliminary election results panning out as expected, the analysts hope Yudhoyono will win a second five-year term and revive economic growth.

A relatively strong showing by PD vis-*-vis other parties would reinforce expectations of the incumbent's reelection.

"Although we expect the election outcome to post only a modest relief rally for Indonesian assets, given that the market has largely priced-in favorable election results for PD, we nonetheless expect an eventual fully functioning democracy *if developments remains on the same course* to compare Indonesia favorably against neighboring countries, especially given recent developments in Thailand," Citi Indonesia said in its post-election outlook.

Prior to the April 9 legislative elections, Indonesian entrepreneurs announced their support for re-election of Yudhoyono, saying that under the current leadership Indonesia had become more "stable, peaceful and united", not to mention had gained invaluable trust from the international world in the country.

Citi Indonesia said there were no surprises in the preliminary vote counts.

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