Wednesday July 8, 2009

Indonesia's Yudhoyono heads for election victory

By Telly Nathalia and Olivia Rondonuwu

JAKARTA (Reuters) - Indonesian President Susilo Bambang Yudhoyono headed for victory in elections as results poured in on Wednesday, pointing the way to a five-year term of quickening economic reform.

Indonesian presidential candidate Susilo Bambang Yudhoyono show his ink-stained finger after voting at a polling station in the Cikeas district in Bogor July 8, 2009. (REUTERS/Beawiharta)

"I think it's clear now that Yudhoyono has won in one round," said Kevin O'Rourke, a Jakarta-based political risk analyst.

Early "quick counts" from across the sprawling archipelago had suggested it was far from certain that Yudhoyono would clinch the 50 percent of votes required to avoid a run-off with his nearest challenger.

But by the time more than half of the LSI polling agency's sample of votes had been counted, the former army general's tally stood at a commanding 58.21 percent.

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

The election, only the second direct vote for a president in Indonesia, will determine the pace of reform over the next five years and cement the country's transition to democracy.

Analysts expect that in a second term Yudhoyono would quicken the pace and widen the scope of reforms in Southeast Asia's biggest economy to attract badly needed foreign investment, create jobs and shore up flagging economic growth.

Indonesian stocks, bonds and the rupiah have rallied this year on the prospect of a Yudhoyono win, and analysts see them rising further on hopes of a more robust reform drive if he wins in one round.

Jakarta markets were closed for the election, but offshore Indonesia's five-year credit default swap was steady at 310/335 basis points, with investors discounting a Yudhoyono win. There was no trade in Indonesia's dollar bonds.

A decade ago, Indonesia was the sick man of Asia. After 32 years of rule by Suharto, who oversaw a system of entrenched corruption and nepotism, it stood on the brink of political, social and financial collapse.

Yudhoyono's government has since brought political stability, peace and the best economic performance in a decade. Today, some see the country on another brink -- of economic take-off and joining the emerging "BRIC" economies of Brazil, Russia, India and China.

"Today is the people's day," Yudhoyono told reporters after casting his vote in the town of Bogor, on Java island.

VOTER LIST ROW

Polling stations opened first in the remote eastern region of Papua, where extra police and special forces were on standby after recent violence linked to separatists.

Other polling stations followed as the sun rose across the rest of the country of 176 million voters, though there was little sense of excitement after weeks of opinion polls showing that Yudhoyono was almost certain to be re-elected.

The streets of central Jakarta, normally choked with traffic, were quiet with a few police standing watchfully at key intersections and close to polling stations.

In Manado, the capital of North Sulawesi, there was no repeat of the protests triggered by problems with the electoral rolls in April's parliamentary elections and the streets were quiet.

"I am here today to vote for a president who is competent, committed to the people, God-fearing and uncorruptible," said Manado resident Olivia Rorimpandey, who refused to say which way she had voted.

A controversy over voter lists marred the run-up to the election with the teams of Yudhoyono's two rivals complaining about millions of duplicate names and even the names of dead people and children on the electoral rolls.

Their barrage of complaints may have fanned public doubt about the credibility of the process, and could make it easier for the losers to challenge the result.

Megawati and Kalla adopted a more nationalist tone than Yudhoyono in their campaigns, promising to squeeze more from the country's rich resources to pay for pro-poor policies.

U.S. President Barack Obama, who lived in Indonesia as a child, is expected to visit the country later this year -- a trip that would warm ties that both countries say they plan to raise to the level of "comprehensive partnership."

However, U.S. trade officials and businesses complain about a range of protectionist policies, including judicial and bureaucratic bias favouring Indonesian firms, as well as rampant corruption that distorts the economic playing field.

(Additional reporting by Ed Davies and Sunanda Creagh in Jakarta, John Pakage in Puncak Jaya and Jun Ebias in Hong Kong)

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