Indonesia's markets have priced in bright prospects for planned reforms, but a new law eliminating local elections has spurred concerns that the country is headed for gridlock.
"It will bring into question [President-Elect] Jokowi's ability to push through the desired reforms after he takes his oath of office on October 20," Kanal Kumar Kundu, an analyst at Societe Generale, said in a note this week.
Last Friday, Indonesia's opposition-controlled parliament passed a bill scrapping direct elections of local officials and instead giving elected regional councils the power to appoint mayors and governors. The move, which was essentially the outgoing parliament's last hurrah, would likely prevent outsiders such as Jokowi, whose full name is Joko Widodo and got his start as mayor of Jakarta, from ever taking political office. Some analysts expressed concern that the new incoming parliament will go a step further and amend the constitution to end direct presidential elections.
Kundu expects that the coalition of Prabowo Subianto, the losing presidential candidate and ex-son-in-law of former dictator Suharto, will use its control of 31 of the 34 provincial legislatures to dominate the country.