Indonesia to ensure stability during elections, says president's chief of staff

JAKARTA (Reuters) - A string of Indonesian regional elections this year followed by a presidential and parliamentary vote in 2019 should not deter foreign investment in Southeast Asia’s biggest economy, President Joko Widodo’s chief of staff told Reuters.

Indonesian Presidential Chief of Staff Moeldoko gestures during an interview in Jakarta, Indonesia, April 11, 2018. Picture taken April 11, 2018. REUTERS/Beawiharta

A bruising campaign to lead Jakarta last year exposed religious and ethnic rifts in the world’s largest Muslim-majority country, as Islamist-led rallies targeted the then governor - an ethnic Chinese Christian accused of blasphemy.

Indonesian police cracked down on some Islamist groups and arrested several people for alleged treason, but the tension has raised concern among some investors.

“Indonesia as a maturing democracy will not be influenced overall by developments in regional elections or 2019 elections. Investors need not be doubtful about coming here,” Presidential Chief of Staff Moeldoko, a retired armed forces chief, said in an interview.

Moody’s Investors Service said in a note this year that regional elections in Indonesia were “likely to slow down any reform momentum”.

Foreign investors have applauded some government efforts to streamline regulations, but say there are still too many restrictive rules and a stifling bureaucracy.

Last year, Indonesia recorded 8.5 percent more foreign direct investment (FDI) in rupiah terms than it attracted in 2016.

Moeldoko, who uses only one name, said the government was focused on ensuring political and economic stability through the election period, which he called a “festival of democracy”.

Indonesia is the world’s third-biggest democracy, but next year’s presidential election will only be the fourth direct democratic vote since the fall of the late strongman Suharto in 1998.

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The contest looks set to be a repeat of 2014, when President Widodo narrowly beat ex-general Prabowo Subianto. The bitter campaign saw Widodo falsely accused of not being a Muslim and being the offspring of Chinese communists.

Since the Islamist-led rallies starting in late 2016, Widodo has scrambled to shore up support from moderate Muslim groups and the security forces to counter hardline groups’ rising influence and defend Indonesia’s reputation for religious tolerance and diversity.

His appointment this year of Moeldoko, 61, who led the military between 2013 and 2015, was seen as part of these efforts.

Moeldoko, who is also head of one of Indonesia’s biggest farmers’ associations, said the government was committed to battling hardline ideology.

“But what’s far more important is that the Islamic axis in Indonesia has a collective awareness that we cannot be promoting an Islam that excludes. We should keep moving toward a moderate Islam,” he said.

“Our hope is that eventually, those who call for...other ideologies, that they understand that ‘Pancasila’ is most right and appropriate,” he added, referring to Indonesia’s secular state ideology.

Opposition leader Subianto’s campaign in the 2019 election is expected to focus on inequality among the country’s 250 million people and argue that the government is overly reliant on Chinese investment.

Last month, during a speech to party members, Subianto referred to a novel, “Ghost Fleet”, which is set in the near future and includes in its plot Indonesia becoming a failed state by 2030, to highlight what he said were the economic and social risks facing the country.

Moeldoko dismissed such risks and said the book written by P.W. Singer and August Cole was “fiction and entertainment”.

“(Consulting firm) McKinsey has said Indonesia will be among the top five or six economies in the world by 2030. We want to focus on how we can make that happen and what this government must prepare to realize that goal,” he said.

Editing by Clarence Fernandez