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Indonesian Economy a Factor in Thursday's Election

  • Katie Hamann

Indonesia has been one of the last Asian nations to feel the squeeze of the global financial crisis. As the nation prepares to go to the polls for national legislative elections.

The global economic crisis was slow to infiltrate the Indonesian economy, but in recent months, the downturn has been felt.

Exports plunged by almost a third in February compared with the previous year. But the nation still achieved a trade surplus because of a larger than expected fall in imports.

Economic growth is expected to slow from just over six percent in 2008 to around three-and-a-half percent this year. That performance is still better than in many Asian countries.

Indonesia's domestic market spares country from global economic crisis

Fauzi Ischan, an economist with the Standard Chartered Bank, says, until recently, Indonesia has been insulated from the global crisis.

"Indonesia is one of the least and last affected countries in Asia by the global financial crisis mainly because of its large domestic market," said Ischan. "So if you look at consumer spending in Indonesia it generates about 60 percent of GDP and if you look at net exports as a percentage of GDP it's actually less than five percent and therefore the collapse in imports because of the global recession and the collapse in global commodity prices, yes it has affected the Indonesian economy but because of the less dependence on exports the impact is less aware."

In previous elections, personalities tended to dominate, but this year, policy issues have been an important part of the pitch to voters. And the economy has been front and center of the debates.

Voters not sure of economic credentials of candidates

On the streets of Jakarta many remain unconvinced about the economic credentials of political candidates.

Joe says now there is more national debt. He says once politicians are elected, they forget their campaign promises, and with this global crisis, it is hard for Indonesians to find jobs.

Yul says now everything is so expensive, and she wants the price of goods to be affordable for all people. She says when President Susilo Bambang Yudhoyono was elected, he promised to help people with affordable basic needs, but in reality life is very difficult.

Thursday's national parliamentary election is seen as an indicator for the presidential vote in July. Voters are expected to give President Yudhoyono another five-year term and the opportunity to carry out much needed investment reforms.

Despite the economic downturn, his popularity has surged in recent months. Some analysts say no other rivals have demonstrated a commitment to reform or job creation.

Indonesians may re-elect President Yudhoyono

Fauzi Ischan says the ability to achieve reforms will depend largely on the make-up of the new government.

"The post-Suharto political system in which there is a hung parliament, [and then] the coalition government does not really control parliament," he said. "There are far too many stakeholders involved, then the decision making process and the implementation process often becomes bogged down."

If parliament remains splintered, and President Yudhoyono can not count on a solid majority for support, his reform efforts may fail.

For average Indonesians, that might not matter right away, since one of the best economic stimulus packages this year may turn out to be the election itself. Millions of dollars have been spent on television ads, T-shirts, posters and campaign travel for thousands of candidates across the archipelago.