Peaceful Rally Meets Investors' Expectations, but Long-Term Political Stability Needed


DECEMBER 02, 2016

Jakarta. Although the peaceful mass prayer rally in Central Jakarta on Friday (02/12) met investors' expectations the business community and market players say the government needs to do more to ease political tensions in future to ensure a conducive investment climate.

Indonesia's benchmark stock index was unshaken by the rally, gaining 0.91 percent in Friday's closing, despite tens of thousands of protesters having converged on the capital to demand the jailing of non-active Jakarta Governor Basuki "Ahok" Tjahaja Purnama on blasphemy charges.

The country's leaders took a soft approach, with President Joko "Jokowi" Widodo and Vice President Jusuf Kalla walking in the rain to join the mass Friday prayer at the National Monument (Monas), along with thousands of protesters. The rally ended with protestors dispersing peacefully.

"Today's event has sent a positive signal to the public as it means our president can assure businesses as well as citizens," Indonesian Employers Association (Apindo) chairman Hariyadi B. Sukamdani said.

"[The president] is really an expert in managing political issues and he also really good in taking the momentum to promote diversity. That different opinion should be celebrated," he said. "For businesses, this makes us comfortable that we have a leader than can offer political stability. Who would have known that he would show up?"

Political Stability

Shinta Widjaja Kamdani, a deputy to the chairman of the Indonesian Chambers of Commerce and Industry (Kadin), said the peaceful end to the rally also ended rumors of a massive run on the banks, which met investors' expectations. There was no bank run and no massive disruption of the country's economy.

"This actually met investors' expectations that the rally would end peacefully," she said.

"In the next future, I just hope there will be no more rallies, as it may affect the investment climate and Indonesia's ease of doing business.

"In the long run, if we talk about the investment climate, it would depend on the country's political stability as it would be investors' main expectation."

In October, Indonesia saw its ranking in the World Bank's ease of doing business report improve, thanks to government efforts to simplify and scrap unnecessary regulations. Indonesia now ranks 91st out of 190 countries assessed in the World Bank's report, having moved up 15 places since the previous list.

Deutsche Bank chief country officer Kunardy Lie said investors appreciated the government's efforts to improve structural bureaucratic reforms, such as speeding up the issuance of business permits and stronger efforts to push forward infrastructure projects.

"Indonesia is [still] an interesting market for investors [...] The peaceful rally/mass prayer was more evidence that our diverse country is moving towards a mature democracy," he said.