July 8, 2009 / 7:41 AM / 9 years ago

SNAP ANALYSIS - Reform push on the way as Yudhoyono heads for wi

JAKARTA (Reuters) - “Quick count” results showed Susilo Bambang Yudhoyono well ahead of his rivals in the presidential election on Wednesday, and likely to win a second term that would give him a free hand to push ahead with reforms.

Yudhoyono and his running mate, ex-central bank governor Boediono, have about 60 percent of the votes, the latest quick count results showed.

His challengers, Vice President Yusuf Kalla and former president Megawati Sukarnoputri, stood at about 16 percent and 26 percent, respectively.

If Yudhoyono gets more than 50 percent of the vote and 20 percent of the vote in half the provinces there will be no need for a run-off with his closest rival.

The following are possible consequences of a Yudhoyono win.

* POSITIVE FOR FINANCIAL MARKETS

Indonesia’s stock market, bonds, and the rupiah are likely to rally on news of a decisive one-round win for Yudhoyono, who will be emboldened to quicken the pace and widen the scope of economic reforms.

* EXPECT TO SEE MORE TECHNOCRATS IN THE NEXT CABINET

Yudhoyono is likely to pick more technocrats, and fewer politicians from among his coalition partners, to fill his next cabinet so that the government can push ahead with reform. He may even recruit younger candidates, bringing in a new generation of future leaders.

* COMMITMENT TO BUREAUCRATIC REFORM

This is Yudhoyono’s last term and he will want to leave a strong legacy. He is likely to push ahead with a shake-up of the civil service, police and judiciary in order to remove major impediments to foreign investment, including legal uncertainty, and pave the way for his government to invest heavily in much-needed infrastructure from ports to toll roads.

* STEP UP EFFORTS TO TACKLE CORRUPTION

With the future of the highly effective Corruption Court in doubt because of parliament’s failure so far to extend its life, Yudhoyono may issue a presidential decree to ensure the court’s continued existence as part of his drive to root out graft.

There is also uncertainty around the powerful Corruption Eradication Commission (KPK) following a murder case involving the commission’s former chief, and talk of stripping the anti-graft body’s power to tap phones.

* FOCUS ON INFRASTRUCTURE

Indonesia needs billions of dollars of new investment to modernise its creaking infrastructure. Priority is likely to be given to ports and toll-roads, cutting the cost of transporting and exporting goods, and helping to reduce the cost of business.

* EXPECT CHANGES IN YUDHOYONO’S COALITION

While Yudhoyono’s Democrat Party has formed a coalition with a handful of small Islamic and Islamist parties who back his reform agenda, it is quite likely Yudhoyono will want to form an even larger coalition and may try to woo Golkar, the party headed by his current vice president and poll rival, Kalla.

Kalla’s poor performance in the election could lead to his ouster as head of Golkar, paving the way for a new leader to form a pact with the Democrats.

Golkar, which for decades was former president Suharto’s political machine, is not used to being out of power and will most likely want to forge an alliance.

That is not necessarily positive for reform: an alliance with Golkar would probably slow the pace of reform, particularly in the civil service, a Golkar power base.

* LOSING CANDIDATES MAY CHALLENGE ELECTION RESULTS

A last-minute scramble over flaws in the voter list heightened fears among some analysts that the losing candidates could challenge the election result in court. There is a smaller risk that they will urge their followers to take to the streets in protest, creating civil unrest and scaring off investment.

Writing by Sunanda Creagh and Sara Webb; Editing by John Chalmers

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