The Battle for Jakarta 2017

Anyone doing business in Asia needs to keep across the political undercurrents of the country they are interested in. And at the moment business in Indonesia is keeping a close eye on the tough battle being fought for the position as Governor of Jakarta, Indonesia’s capital city.

It is a critical moment which, as always, reveals the complex nature of the place. The incumbent Basuki Tjahama Purnama, popularly known as Ahok, has won residents’ support with his uncompromising can-do approach. He took over the reigns of reform from his friend and predecessor, the current President Joko Widodo. The new way of doing business though has rankled many, and the election has become a test of whether this kind of reformist style will be allowed to continue.

Ahok has managed to shake-up a city bureaucracy and demand more accountability for its budget.  Some of his actions, such as cleaning up slum areas, have hurt and angered the poorest residents.  The campaign to prevent him winning the Governor’s race has been electrified by the entry of national interests who have turned it into a tough proxy battle in the lead-up to the 2019 Presidential election. The current President, Joko Widodo, was catapulted from being the Governor of Jakarta to President and the capital city role is now seen as an essential fast-track step.

On top of this, religion is being used to galvanise voters against Ahok, raising questions about what direction the nation’s democracy will take. Ahok is on trial and facing blasphemy charges – he has apologised for his comments however denies that he has done anything wrong.

Business, like everyone, is in a wait and see approach. Foreign direct investment slowed in the last quarter of 2016, which analysts said could be partly attributed to the political tensions.

To date the signs under Governor Ahok had been promising. The city was making progress in areas that had often talked about, but not acted on. Now there has been work on clearing drainage and waterways to handle the heavy rains, provide better services, and make the city bureaucracy more efficient. The Governor is in charge of a large budget, and Ahok was not afraid to talk tough to officials about making sure the funds were disbursed transparently.  His brash and confrontational style got results but also caused some resentment.

He himself has faced questions over his role in the reclamation of an offshore area for development.

Business (and Jakarta’s residents) has seen progress in projects such as a desperately needed mass rapid rail system being built below and above the city’s streets. This kind of work and reforms initially introduced by Jokowi, as the President is colloquially called, have been considered signs that Indonesia is modernising. Commentators have noted that business has had more certainty about the environment they are operating in.

Ahok was considered a certain winner in his first bid to be elected in his own right, until he uttered comments late last year that his opponents were misleading voters with the way they were using a verse in the Koran. The backlash was unforseen, as conservative forces took offence, and hundreds of thousands of mainstream muslims who felt insulted marched on the streets in protests that shook the city with their size and message. The issue had given Ahok’s political opponents the ammunition they needed to sharpen the campaign.

Ahok’s ethnicity as a Chinese Indonesian, and Christian religion, are being used against him. This has raised doubts about whether Indonesia can maintain its diversity or will head into a more hardline islamic environment.

While Ahok garnered the most votes in the first round at around 43% he did not reach the simple majority needed to avoid a run-off. Ahok is now competing with former education Minister Anies Baswedan, who gained 40% of the vote and who to date has been considered a moderate muslim. He has the backing of the Gerindra Party, chaired by Prabowo Subianto, who lost the bid to become President in 2014. Mr Baswedan has also been criticised for courting hardline islamic groups during the campaign.

For business, domestic and international, the question is whether whoever is the new Governor will continue to make the system fairer and more accessible.

While Mr Baswedan spoke in one of the election debates about having an effective and service-oriented bureaucracy. It will be up to Jakarta’s citizens to decide if he should be allowed to test and carry-out ideas.

The next round of the election is on April 19th.  Once again an Indonesian election is a test of the direction of the nation’s democracy. For business, it will also be a signal as to the kind of operating environment they will required to navigate.

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