Lack of reform-oriented leaders may hurt business environment in Indonesia

Lack of reform-oriented leaders may hurt business environment

Published: 2013/09/02

JAKARTA: Indonesia’s rapidly growing economy offers opportunities for entrepreneurs, but the lack of a strong reformist candidate for the upcoming presidential elections may hurt the business environment, according to a report by Ernst & Young. The global company, whose services include financial and tax auditing as well as various advisory services, recently released the outcome of its study on entrepreneurship in each of the world’s top 20 economies. Indonesia, the world’s 16th largest economy, was part of the “EY G-20 Entrepreneurship Barometer 2013.” Analysing Indonesia’s strengths, weaknesses, opportunities and threats, the study said: “A strong reformist candidate has yet to emer-ge for elections in 2014, raising the possibility of backsliding on earlier improvements to the business environment thereafter.”

President Susilo Bambang Yudhoyono will leave office after next year’s presidential election, which many observers say is more significant than those before it because the president is barred from seeking another period in office due to term limits. Although the bulk of EY’s study mentioned improvements in Indonesia, it also said “the reform process is far from complete, and there are signs that it has already started to stall.”
The study involved a survey of more than 1,500 entrepreneurs as well as quantitative data based on entrepreneurial conditions across Group of 20 economies. The qualitative and quantitative elements were weighted equally.
The study noted that Sri Mulyani Indrawati, a reformist admired by foreign investors, left her post as finance minister in 2010 amid political intrigue.
“There is a lack of strongly reform-oriented candidates among those who have declared their interest in standing,” the study said, adding that “the hope is that a strong reformist candidate will emerge this year.”
Indonesia’s annual economic growth may fall below six per cent in the future amid challenges from global market turbulence, higher inflation and rising interest rates.
This environment has led to keen interest among investors in the outcome of the presidential election.
Most of the likely election candidates are long-time politicians, but Jakarta Governor Joko Widodo, a new arrival in national politics, leads opinion polls.
The governor’s down-to-earth manner has won him fans among Indonesian voters who are tired of the more formal style of the nation’s politicians. Joko, previously the mayor of Solo, came third in a 2012 assessment of the world’s best mayors.
The 2014 ballot will be the third time that Indonesians will directly elect their president, after Yudhoyono won the previous two. In 1999, the president was selected without a direct popular vote.
On the business environment, the EY study said that “strong economic growth and a huge population mean Indonesia offers entrepreneurs a large domestic market, especially for low-end consumer goods.”