Indonesia's Yudhoyono wins second term; reform ahead

JAKARTA Wed Jul 8, 2009 10:44am EDT

1 of 14. President Susilo Bambang Yudhoyono's campaign team flash the victory sign in Cikeas, West Java in Jakarta July 8, 2009.

Credit: Reuters/Supri

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JAKARTA (Reuters) - Indonesia's voters handed President Susilo Bambang Yudhoyono a second five-year term on Wednesday, placing their faith in his firm hand on the economic tiller and his promises to quicken the pace of reform.

Officials results from the election will not be announced until later this month, but "quick count" results -- which have proved extremely reliable in the past -- showed Yudhoyono had won enough votes to avoid a second run-off with his nearest rival.

Not known for jumping to a conclusion, even the cautious Yudhoyono acknowledged his own resounding victory as the results rolled in from across the archipelago of 226 million people.

"My first priority will be recovering our economy," the former army general told reporters at his home after a peaceful and low-key day of voting in the world's third-largest democracy.

The LSI polling agency's sample of votes showed Yudhoyono's tally stood at a commanding 60.82 percent. Other counts put his score slightly lower, but all showed him comfortably above the halfway mark needed to avoid a second round.

The election, only the second direct vote for a president in Indonesia, cements the country's transition to democracy after a chequered history. It is also likely to usher in an acceleration of reforms in Southeast Asia's biggest economy that could lure foreign investment, create jobs and shore up flagging growth.

Indonesian stocks, bonds and the rupiah have rallied this year on the prospect of a Yudhoyono win, and analysts now see them rising further on the results.

Jakarta's financial markets were closed on Wednesday, but in early U.S. trading depositary receipts for Indonesia's two biggest telecoms stocks -- PT Telekomunikasi Indonesia and PT Indosat -- rose 2.5 percent and 2 percent, respectively.

A decade ago, Indonesia was the sick man of Asia. After 32 years of rule by Suharto, who oversaw a system of entrenched corruption and nepotism, it stood on the brink of political, social, and financial collapse.

Yudhoyono's government has since brought political stability, peace and the best economic performance in a decade. Today, some see Indonesia on another brink: of economic take-off and joining the emerging "BRIC" economies of Brazil, Russia, India and China.

Nevertheless, the world's most-populous Muslim nation is hardly problem-free: corruption is widespread, infrastructure is in dire need of an overhaul and millions live in poverty.

CHALLENGERS WAY BEHIND

Yudhoyono, 59, has been criticized in the past for giving key posts to politicians from coalition parties to ensure support in parliament, even though these allies had little zeal for reform.

"A decisive electoral victory will strengthen Yudhoyono's bargaining position and give him the upper hand in selecting technocratic and reform-minded ministers for his new cabinet," said David Kiu of political risk consultancy Eurasia in a report.

Yudhoyono's hand has also been strengthened now that his Democrat Party has about a quarter of the seats after April's parliamentary poll, against only 7.5 percent of the vote in 2004.

"He will try to do more to attract investment but at the same time he will be more serious about eradicating corruption. He will prioritize good governance and economic growth," said political scientist Aleksius Jemadu at Pelita Harapan University.

"He will reform the bureaucracy to make it easier for investors to come here. He will make sure some of the red tape and the bureaucratic obstacles will be removed."

The LSI vote count showed that Yudhoyono's challengers, former president Megawati Sukarnoputri and Vice President Jusuf Kalla, were trailing at around 27 and 13 percent, respectively.

Megawati and Kalla adopted a more nationalist tone than Yudhoyono in their campaigns, promising to squeeze more from the country's rich resources to pay for pro-poor policies.

A controversy over voter lists marred the run-up to the election, with the teams of Yudhoyono's two rivals complaining about millions of duplicate names and even the names of dead people and children on the electoral rolls.

There had been some concern that the pair might use the doubt sown about the credibility of the vote to challenge the result, but Kalla conceded defeat just hours after polling booths closed.

Megawati's running mate, Prabowo Subianto, said they would wait for the final results.

(Additional reporting by Ed Davies, Sunanda Creagh, Olivia Rondonuwu and Telly Nathalia in Jakarta, and Muklis Ali in Bogor; Writing by John Chalmers; Editing by Sara Webb)

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