Key points from DB MIC on politics - Deutsche Bank

We hosted a call to discuss the latest development in Indonesian politics with Wimar Witoelar, a renowned political commentator, who served as the presidential spokesperson for Aburrahman Wahid. Key points from the call:

Political stagnation likely to remain, but muted impact on economic growth
Over the past year, coalition members Golkar (19% of parliamentary seats) and PKS (10%) have twice taken opposing positions to President Susilo Bambang Yudhoyono’s Partai Demokrat (PD), resulting in political stagnation and slow in passing of legislation. SBY is hesitant to exercise his mandate despite winning 60% of the popular vote as PD only won 26% of the seats. However, even with no major government breakthroughs since 2004, the good news is that economic
growth has remained robust driven by private sector investment and consumption. In Wimar's view, political stagnation is unlikely to derail growth. However, he is concerned on the social implications from the rising threat to pluralism.

Parliament begins to review the proposed land acquisition bill
Despite the stagnation, the parliament has now put the review process of the proposed land acquisition bill on fast track, which was submitted by the government last December and is scheduled for completion by June/July 2011, in a bid to pass the bill into law in mid-2011. The coalition parties appear to have a common goal to pass this bill to speed up land procurement process for infrastructure realization.

Golkar's position in coalition secure; cabinet reshuffle still possible
Given its strong political clout an agreement was reached between Golkar’s Chairman Aburizal Bakrie and SBY; Golkar will remain in the coalition and support the government until 2014 even as a faction in PD were eager to replace Golkar. In addition, there are signs that PKS's position in the coalition and cabinet is not secure. Hence, a cabinet reshuffle is likely, although not imminent. There is precedence for doing this as during his first term SBY reshuffled his cabinet twice.

Candidates already strategizing for 2014 presidential elections
Though there are three more years left for SBY’s final term, several candidates are already preparing for the 2014 elections: 1) Aburizal Bakrie, who has the political machinery of Golkar and finances to mount a campaign, although he lacks popularity; 2) Prabowo, an ex-general and the founder of the Gerindra Party, who polls favourably; 3) No clear candidate for PD at this point, but there is a faction that wants the First Lady Ani Yudhoyono to run for the elections, but both Yudhoyono and SBY have repeatedly rejected the idea; 4) Surya Paloh, a media mogul, is preparing to set up a new political party, the Nasional Demokrat; 5) The dark horse is former finance minister Sri Mulyani Indrawati. However, she lacks a political vehicle and funding.