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Customer Facing

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Indonesia
Country Report Q1 2012

POLITICAL AND SOCIAL BACKGROUND

Indonesia has excellent prospects for long term growth, based on macroeconomic stability, supported by strong domestic consumption and stable political conditions.
President Susilo Bambang Yudhoyono’s reputation remains high in international circles, boosted by the country’s focus on re-establishing its leadership role within ASEAN and as the incoming Chair of APEC 2013. The country has a demonstrated desire to take on a global role by promoting itself as the world’s third largest democracy and largest moderate Muslim-majority country, but also as a new Asian economic powerhouse with stable economic growth and sound macroeconomic outlook. A more influential role in G20 highlights how Indonesia now is placed alongside giants China and India as one of the most important emerging economies in the world. Yudhoyono has two and a half years left in office and should further accelerate the reforms of the country, before his term ends in 2014. However, the most pressing reform on subsidised fuel price has yet again been postponed. In late March Indonesia’s revised 2012 budget was discussed in parliament. Following violent demonstrations, the President lost crucial support within his coalition failing to push the fuel price hike vote through parliament. The President’s Party has taken a hit in terms of popularity. A survey by the Indonesian Survey Institute showed that domestic support for the ruling Democratic Party has dropped sharply due to the perception that its fight against corruption is failing. Yudhoyono’s popularity has steadily fallen in the past year over concerns on progress in the fight against graft. The survey projected that if a general election was held today, the Democratic Party would win 13.7 % of the vote, down from 21 % in the 2009 election win. Poverty reduction and unemployment…...

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