Hopes are running high for Indonesia's newly-elected president Joko Widodo, however the charismatic Jakarta governor's relatively narrow victory means he now faces the onerous task of implementing reforms while appeasing coalition partners.
53-year-old Widodo, or more popularly known as "Jokowi," emerged victorious in the country's July 9 presidential elections with a margin of more than 6 percentage points over his rival former general Prabowo Subianto. It was one of the most closely-contested elections in the country's democratic history.
"A narrow victory for Jokowi may not be sufficient to empower the newly-elected president to carry out all the desired," Kunal Kundu, economist at Societe Generale, wrote in a report, noting that a victory margin of at least 10 percent would have helped to remove the cloud of political uncertainty.
Jokowi has inherited an economy that is in urgent need of reforms to put it on a sustainable growth path, including cutting fuel subsidies to free up cash for sorely-needed infrastructure investment. Fuel subsidies are among Indonesia's biggest budget expenditures – greater than healthcare and infrastructure spending, according to IHS.
"Satisfying the demands of coalition partners and keeping a workable coalition together is likely to be a constraint on policy reform for the country's next government," added Goldman Sachs economists Andrew Tilton and Mallika Chawla.
According to Mark Matthews, head of research for Asia at Bank Julius Baer, with just 37 percent representation in parliament, Jokowi's coalition won't be as effective as its counterpart in India.
During India's general elections in May, the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi won 62 percent of seats in the lower house of parliament.
"It doesn't mean he can't get anything done, it would certainly mean a lot more horse trading and that would be dilutive to the reform process," he added.