MacroInsight / Click here for full PDF version
Author(s): Luthfi Ridho ;Axel Azriel
- Regional election will commence in late Nov and shall the winner is coming from ruling party, we expect more effective bureaucracy ahead.
- We expect regional election to add additional +0.6% to 4Q GDP. The relatively small figure was due to 37 single candidates (c.7% of total).
- We see short term catalyst to GDP growth and expect higher growth of +5.1% yoy in 4Q24. We keep our GDP expectation at 5.2% in FY25.
Regional election results will determine bureaucracy effectiveness
The first simultaneous nationwide regional election will commence on 27th of Nov24 and will be held in 37 provinces (excluding Yogyakarta) and 508 regents/municipals (also around 202mn voters). We believe if the elected governor/municipality comes from the ruling party, the bureaucratic process of central government vis--vis regional government may be improved. Please note that PDIP is not defined as the ruling party.
More than expected single candidate
The upcoming 2024 regional election will be the largest in Indonesia's history, which involve 1,553 candidates (see fig. 5) that will compete for regional leadership position (governor, mayor and regent). However, this was lower than our initial expectation of c.1,978 candidates, since the single candidate recorded at 37 regions. Furthermore, popularity wise, recent data from Google Trends also showed that people are relatively less aware of the upcoming election compared to the previous ones (see fig. 3 and 4). Both factors might affect to lower campaign spending in our view, as there will be no opponent to compete combined with less general public participation.
Lesser economic impact from smaller candidate
Total spending for the election is expected to reach Rp87.6tr or around 0.4% of GDP. This figure mainly composed of (1) governor campaign spending at Rp11.1tr, (2) regent/mayor campaign spending at Rp39tr and (3) KPU (election committee) spending at Rp37.5tr. Overall, our simulation suggests an additional of +0.6% to the GDP figure as the baseline. Should the campaign activities is more festive, we expect an additional of +1.3% to the GDP figure (doubled vs. base case scenario).
Region election example: Jakarta
There are three candidates for the governor of Jakarta (1) Ridwan Kamil - Suswono, who is promoted by 12 political party named "Kim Plus coalition" (ruling party coalition), (2) Dharma Pongrekun - Kun Wardana who is an independent candidate and (3) Pramono Anung - Rano Karno who is promoted by PDIP (see fig.11 for more information). Recent poll by various surveyor suggests that Pramono - Rano (c.38-42% of vote) has surpassed Ridwan - Suswono (c.35-37% of vote) to win Jakarta election. Shall it happen, the winner of the election is coming from PDIP which currently not the ruling party; this may affect bureaucracy going forward.
Sumber : IPS
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