Economy, Gaza war and China ties dominate

JAKARTA — Indonesia is set to choose its next president and vice president in February as it grapples with a declining opposition presence in parliament and seeks continuity of economic initiatives under President Joko “Jokowi” Widodo, who is set to step down in October.

The world’s third-largest democracy will open its polls to over 204 million eligible voters casting their ballots, according to its General Elections Commission. The elections will take place on Feb. 14, though millions abroad will be able to cast their votes at Indonesian embassies earlier.

The leading pair of hopefuls is Defense Minister Prabowo Subianto and Gibran Rakabuming Raka, the mayor of Solo and Jokowi’s eldest son.

Former education minister and ex-Jakarta governor Anies Baswedan, is another presidential hopeful whose running mate is Muhaimin Iskandar, chairman of the National Awakening Party (PKB).

The final duo is former Central Java governor Ganjar Pranowo and Mahfud MD, the country’s political, legal and security affairs coordinating minister.

Prabowo-Gibran are leading with 46.7%, according to a Indikator Politik Indonesia poll conducted between Dec. 23 and 24, followed by Ganjar-Mahfud at 24.5% and Anies-Muhaimin at 21%. If no candidate wins the majority in the first round, there would be a runoff in June.

Here are some economic, electorate and diplomatic issues in the country in the run-up to the election.

Indonesia plans to relocate its capital from Jakarta to Nusantara in Borneo, a mega project with an estimated cost of over $30 billion. Presidential contenders Ganjar and Prabowo have pledged their commitment to building Nusantara, while Anies has criticized the planned smart city.

“Many investors are taking a cautious approach during this transitional period in order to better evaluate the probable impact of the election on the overall investment landscape,” wrote Edelman Global Advisory in June.

Voters have largely focused on the presidential election and paid less attention to the legislative polls, said Titi Anggraini, an advisory board member of the Association for Elections and Democracy (Perludem) in Indonesia.

Over four-fifths of Indonesia’s current parliament is comprised of coalition parties, leaving little room for opposition representation.

“An effective parliament, which is a balancing force, is almost non-existent, but is like a chorus with the executive [branch]. It threatens democratic practices,” she told CNBC.

“Controversial legislative products were very easy to pass, such as the Corruption Eradication Commission (KPK) law revision, then the job creation law, then the Constitutional Court (MK) law revision.”

In 2020, the job creation law triggered protests in multiple cities as concerns grew it would erode worker rights. In 2019, Indonesians demonstrated against a new law that weakened the KPK. Meanwhile, the MK law revision comes as the court is responsible for settling potential election disputes this year.

While having greater opposition representation in Indonesia’s parliament could raise the bar for passing such laws, Titi said there’s still a very high barrier to entry for the candidacy process. She said “only the elite can break” into elected positions, which means many women, youth and marginalized members of society have little to no representation in elected office.

According to Freedom House’s Freedom in the World 2023 report, Indonesia ranked “partly free,” scoring 58 out of 100. “Political parties are subject to 30 percent gender quotas for steering committees and candidates. However, women remain underrepresented in electoral politics,” it wrote.

Indonesia’s next leaders will also contend with a range of geopolitical issues, especially Jakarta’s relationship with Beijing.

A report published by Singapore’s ISEAS — Yusof Ishak Institute in early 2023 found that 71.1% of Indonesian respondents said China was the most influential economic power in Southeast Asia, up from 67.9% in 2022. The report surveyed 1,308 Southeast Asians, 9.3% of whom identified as Indonesian.

Indonesia’s Center of Economic and Law Studies wrote in its August policy brief that “China’s influence is increasingly unavoidable because Indonesia is now economically dependent on China.” Indonesia is home to Southeast Asia’s first high-speed railway, a project that was part of China’s Belt and Road Initiative.

“Under Jokowi’s administration, our relationship is now at its peak, at its best with China,” Lina Alexandra, international relations department head at Indonesia’s Centre for Strategic and International Studies, told CNBC, citing the rail line as an example.

But for some Indonesians, the cozier relationship has also sparked debt-trap fears and concerns about an influx of Chinese workers.

A 2021 survey by Australian think tank Lowy Institute found respondents ranked promoting peace and conflict resolution (86%) as well as advocating for Muslim communities in other countries (78%) as more important on Indonesia’s list of foreign policy goals. The report surveyed around 3,000 Indonesians between 17 and 65 years old across 33 provinces.

Lina said developments in the war between Israel and Palestinian militant group Hamas are among the most important geopolitical issues for Indonesia. The country has called for a two-state solution, while many Indonesians have protested against Israel’s aggression.

All three presidential contenders have expressed support for Palestinians. Anies has said he wanted to visit the Palestinian territories if elected president. Before officially registering as a presidential candidate, frontrunner Prabowo said he supported Palestinian independence. Former Central Java governor Ganjar was a vocal opponent of Israel’s participation in 2023’s FIFA U-20 World Cup. The tournament was set to be held in Indonesia, until FIFA stripped the country of hosting rights.