Indonesia in 2024: Why a Jokowi win may build a foundation for a brighter future

On 19 March 2019, Indonesia came closest to its future with President Jokowi beaming as he rode the state-of-the-art Japanese funded subway line in Jakarta – a feat that has eluded all of his predecessors. And this is an image that Jokowi wants to sear into the minds of voters in h is re-election bid – that is he the president that will hurl Indonesians into 2024 in style, one with new roads, railways, seaports, refineries to meet the rising demand for infrastructure. While Jokowi has underperformed in terms of economic promises – GDP has trended on average only 5% versus the promised 7% since 2014 - the imagery of Jokowi as a pragmatic and competent president likely resonated and will propel him forward. To be sure, his government has ensured that the two benchmarks for Indonesian management were met with high marks – low inflation and a stable rupiah. And it was willing to sacrifice growth by hiking 175bps, imposed import curbs, and some fiscal space by raising costs of subsidies to ensure that price pressures fell below the central bank target range. The rupiah, too has stabilized despite some periods of shocks thanks to the central bank’s vigilance. We believe that the re-election of Jokowi will allow him to finish what he started - increasing the infrastructure supply with 245 on-going and planned national projects to build roads, railways, seaports and refineries amount to 31% of GDP or USD304bn. And if he is able to do so, Indonesia will go beyond the 5% growth range. It already has a ballooning working age population, coupled with the increasing urban population, which is expected to increase to 70% of the total by 2050 or 88 more million people moving to the cities. Meaning, demand isn’t a challenge but rather adequate supply. I f the investment part of the equation picks up, then Indonesia will like ly reap its demographic dividend to reduce domestic bottlenecks such as congested roads and inadequate supply of electricity and improve connectivity to the rest of the world via air transport to promote tourism and maritime investment for better trade logistics.