A bad month for Indonesia

A number of developments over the past month have cast a shadow over Indonesia’s prospects. The first was the publication of GDP figures for the final quarter of last year which showed a slowdown in the pace of growth. A fall in government spending, which has been a key factor behind the recent weakness of the economy, is likely to continue weighing on growth this year. Meanwhile, the row between the US mining giant, Freeport, and the Indonesian authorities is continuing to escalate following the government’s recent decision to ban exports of copper concentrate as part of its efforts to boost the country’s smelting industry. The spat highlights once again how the introduction of arbitrary regulations is damaging Indonesia’s profile in the eyes of foreign investors. Finally, although the first round of voting in Jakarta’s mayoral election passed relatively peacefully, the criticism experienced by the incumbent, Basuki Tjahaja Purnama, a Christian of Chinese descent, during the campaign has raised fears that fringe Islamist groups will play a key role in influencing Indonesian politics over the coming years.