RHB Indonesia Morning Cuppa - 5 December 2016 - (Strategy)

Good morning,

A peaceful Friday’s event – signal for improved stability

The massive rally on the 2 Dec 2016 ended on high note, a peaceful and well in order event with no incidents reported in spite of thousand of participants that gathered around the Monas (Central Jakarta) area. The spotlight was on President Jokowi who made an impromptu visit to join the Friday’s prayer and gave brief speech in front of thousand of rally participants. His bold move has undoubtedly drawn positive response and improves the confidence to the government, in our view.

We see 3 main key points:

1. The President’s impeccable ability and understanding to calm down heighten political situation is clearly visible, and this would ensure stable and conducive environment going forward. Jokowi’s absence during the last rally on 4 Dec which has been used as a way to disparage the government’s authority would now be dissipating.

2. The police and army continue to showcase solid exemplary conduct in maintaining stability, without the image of overly repress the democratic environment. This ability is clearly important and it is now perceived that the overall security forces have been able to step up their capability under the current government.

3. The police investigated several people for suspected treason on early Friday. There have been widespread concerns that the rally against Jakarta government might also be used as an act to topple the current legitimate government, and the police’s on-going treason investigation would be seen as strong warning signal to those perpetrators. We continue to believe that the Government’s position remains strong. As long as these forces remain united under presidential control, any act that destabilises the country can be brought under control quickly.

On the alleged religious defamation by Jakarta governor Basuki Purnama case, the police worked fast, and have completed all the necessary process. The case is now already under the Attorney General Office’s jurisdiction for further proceeding to the court.

With the peaceful rally last Friday, the political situation is now entering the next chapter and we anticipate for more conducive and stable environment going forward. We opine that Indonesia’s fundamentals remain pointed towards long-term positives. This is underpinned by BI’s pro-growth policies to propel economic growth, the low inflation environment, continued government focus on infrastructure spending, and the security forces’ exemplary conduct in maintaining stability as political tensions rise. (Helmy Kristanto)

Link to Daily report: Indonesia Morning Cuppa - 051216